Wednesday 05 April 2023

GST on Outgoings - Everything You Need to Know

Even if these expenses do not include GST, you are required to add GST to the amounts when transferring them as recoverable outgoings. This can often leave Tenants confused and wondering how this is fair.

The reason for this is that when a Landlord leases a commercial property, it is considered a taxable supply according to the Australian Taxation Office (ATO).

The Tenant and Landlord agree on a specific amount each will pay for the supply of the property, including outgoing expenses (also known as operating expenses). The Landlord must pay GST on the money they receive from the Tenant to cover those expenses, even if they did not pay GST on the expense themselves.

If the lease agreement allows the Landlord to recoup GST on monies paid by the Tenant, a charge for GST will be included on the Tenant's invoice, in addition to the rent and other expenses.

It is important to note that adding GST to the expenses does not mean the Landlord is trying to profit from the situation; they are simply passing along the GST charge they were assessed.

If you have any questions about this topic, we recommend reaching out to the ATO or your Financial Advisor for further information. It's important to understand your obligations as a Landlord and to communicate clearly with your Tenants about expenses and charges. Otherwise, call our Head of Property Manamgement, Sash Naidoo on 0411 528 878 or email sash@yourcommercial.com.au