Answers · Sale & leaseback tax considerations
What are the tax considerations in a sale and leaseback?
Direct answer
A sale and leaseback typically raises three broad tax questions for a vendor: whether the sale triggers a capital gains tax (CGT) event, how GST applies to the sale (including whether going-concern treatment might be relevant), and how the ongoing leaseback rent is treated for deductibility. All depend on the specific structure and should be worked through with a tax adviser before proceeding.
Selling a property you own is generally a disposal for tax purposes, which is why CGT is usually the first question a vendor's accountant will consider — including how the property has been held, and what (if any) concessions or offsetting positions might apply to that vendor's situation.
GST is a separate question again, turning on how the property has been used and how the sale and lease are structured — this is also where the concept of 'going concern' treatment sometimes comes up in relation to commercial property transactions, though whether it applies is entirely fact-specific. On the other side of the transaction, the leaseback rent then becomes an ongoing cost to the business, and how that rent is treated for tax purposes is a further, separate question.
This is a general concept map only, referencing current Australian accounting and tax settings in broad terms — it is not a substitute for advice on your specific transaction. This is general information, not advice — get your own tax/legal/accounting advice before entering a sale and leaseback.
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