How does GST apply to commercial property transactions?

Commercial and industrial property sits differently to residential property under GST law, largely because it's typically used in the course of an enterprise rather than as a private home. Rent on a commercial lease is generally subject to GST, and the sale of commercial property can be too — though whether GST applies, and who bears it, depends on factors like whether the vendor is registered for GST and how the sale is structured.

The going-concern concept is particularly relevant to sale and leaseback and other tenanted-property transactions, because a property being sold with an existing lease in place, as part of an ongoing income-producing operation, can potentially qualify for GST-free treatment if the specific legislative conditions are satisfied. Getting the structure and paperwork right matters, because getting it wrong can create an unexpected GST liability for either party.

GST treatment depends on the specific facts of a transaction and on current tax law, which can change. This is general information only, not tax advice — anyone involved in a commercial property sale, purchase or lease should get advice from a qualified accountant or tax adviser on how GST applies to their specific situation.