If you lease out a shop, office or factory and you are registered (or required to be registered) for GST, you charge GST on the rent, and the ATO treats most outgoings the tenant pays as part of the rent, so GST is charged on those too. You can claim GST credits on the costs of running the property, and you report all of it on your BAS: G1 for total sales, 1A for the GST you charged and 1B for the GST you can claim.
The details below are as at October 2026, from the ATO’s own pages (linked at the end). This is the landlord’s side; the tenant’s side is in the questions at the end.
GST on the rent
The ATO’s position is plain: if you lease out a factory or shop, and you are registered or required to be registered for GST, you are liable for GST on the rent you charge. Residential rent is the opposite (it is input taxed, with no GST), so a property that is part commercial and part residential needs its income split.
You must register once your GST turnover reaches $75,000. The ATO says dealing in property, including leasing, can count as running an enterprise, so rent counts towards that figure. Your GST turnover is your gross business income (not profit) less GST and a few exclusions, measured on the current month plus the previous 11, or projected over the current month plus the next 11.
GST on outgoings
Outgoings are the costs a commercial lease passes to the tenant: council rates, land tax, insurance, repairs and maintenance, water, and the like. The ATO’s ruling on this (GSTD 2000/10) says that when a lease supplies the premises together with the services the tenant needs to use them, that is generally a single supply of real property. Payments of the landlord’s outgoings are then part of the consideration for that supply.
In practice that means:
- Outgoings are part of the rent for GST. If the rent is taxable, GST applies on the outgoings the tenant pays, whether the tenant pays the landlord or pays the third party (the council, say) directly.
- It does not matter whether the landlord’s own cost had GST in it. Council rates and land tax carry no GST when the landlord pays them, but when the tenant reimburses them under the lease, they are still part of the taxable supply of the premises. The landlord charges GST on the recovery.
- Insurance, promotional levies and repair costs recovered under the lease are in the same position.
- Estimates and reconciliations. Many leases charge estimated outgoings monthly and reconcile to actuals later. GST applies to the estimated payments, and when the reconciliation changes the amount, it is an adjustment event: the landlord adjusts the GST it charged, a registered tenant adjusts the credits it claimed, and the landlord issues the tenant an adjustment note.
There are limits. The ruling says a charge can be a separate supply where the landlord provides something extra, such as office services billed on the tenant’s use. And an expense the tenant would be liable for regardless of the lease is not part of the rent. Whether a lease makes a single supply or several depends on its terms.
The ruling also notes that outgoings count towards the landlord’s GST turnover, because they form part of the value of the supply of the premises.
The lease’s GST clause
The ATO sets out when GST applies. What the lease says about the amounts is a separate, contractual matter (practice, not a rule from the ATO’s pages): most commercial leases state whether the rent and outgoings are plus GST or include it, how invoices are issued, and who pays when outgoings are reconciled. Read that clause before working out any figures: the rent in the lease may be the GST-exclusive amount with GST added on top, and if the lease doesn’t let you add GST, the GST still applies and is one eleventh of what the tenant pays (example 4 in GSTD 2000/10). For anything unclear, a solicitor or a registered tax agent can read the lease against your situation.
Claiming GST on costs
You can generally claim GST credits on purchases that relate to leasing the property, for example the GST in the managing agent’s fees. The usual rules apply:
- The purchase price must include GST, and you must be registered.
- For a purchase over $82.50 (including GST) you need a tax invoice, and the ATO says to wait until you receive it before you claim, even if that is a later period.
- Some costs have no GST in them, so there is nothing to claim: council rates and land tax are the common ones.
- You claim within four years.
Income tax is separate: rent goes in your tax return, and the ATO’s leasing page covers which expenses are deductible.
The ATO also says that if you account for GST on a non-cash basis, each rent payment under a lease is treated as a separate supply, and its GST is attributed to the period you receive the payment or issue an invoice for it (whichever is earlier). It is worth knowing which of the two your business uses before you add up a quarter.
A worked quarter
A family trust owns one commercial unit, leased to a café. The trust is registered for GST and reports quarterly. For January to March 2027 (BAS due 28 April 2027), assume every invoice is issued and paid within the quarter.
What the trust charges the tenant
| Item | Excl. GST | GST | Incl. GST |
|---|---|---|---|
| Rent, 3 months at $4,000 plus GST | $12,000.00 | $1,200.00 | $13,200.00 |
| Outgoings recovered: rates $600, insurance $1,200 | $1,800.00 | $180.00 | $1,980.00 |
| Total | $13,800.00 | $1,380.00 | $15,180.00 |
What the trust paid for the property in the quarter
| Cost | Paid (incl. GST) | GST in the price |
|---|---|---|
| Managing agent’s fees | $990.00 | $90.00 |
| Building insurance | $1,320.00 | $120.00 |
| Repairs to the unit | $770.00 | $70.00 |
| Accountant’s fee for the trust | $330.00 | $30.00 |
| Council rates (no GST) | $600.00 | $0.00 |
GST is one eleventh of a GST-inclusive price: $990 divided by 11 is $90, and $15,180 divided by 11 is $1,380.
On the BAS (reporting G1 GST-inclusive, which you must indicate)
| Label | Figure | Where it comes from |
|---|---|---|
| G1 total sales | $15,180 | Rent and outgoings, including GST |
| 1A GST on sales | $1,380 | GST charged to the tenant |
| 1B GST on purchases | $310 | $90 + $120 + $70 + $30 |
The trust pays the ATO 1A minus 1B: $1,380 minus $310 is $1,070. The council rates are in the books as an expense, but they have no GST in them, so they add nothing to 1B, even though the trust recovered them from the tenant and charged GST on the recovery.
If the year-end reconciliation shows the tenant’s share of outgoings was lower than the estimates, the trust makes a decreasing adjustment to the GST it charged and gives the tenant an adjustment note, and the café, if registered, adjusts the credits it claimed (the ATO’s ruling, GSTD 2000/10, covers this).
Buying or selling commercial property
Buying and selling change the GST position a lot, and getting it wrong can be expensive, so this is only a signpost. Two schemes come up most often. A sale can be GST-free as a going concern, if the property is leased when it is sold and conditions are met, including a written agreement and a purchaser who is registered for GST. Or the seller may use the margin scheme, which works out the GST on the margin and not the full price, and needs a written agreement before settlement. Which one applies depends on the facts, so read the ATO’s pages below and talk to a registered tax agent or solicitor before signing a contract.
Questions
Do I charge GST on commercial rent?
Yes, if you are registered or required to be registered for GST. You are required to register once your GST turnover (which includes the rent and outgoings recovered) reaches $75,000.
Do I charge GST on outgoings the tenant pays?
Generally yes. The ATO treats outgoings payable under a commercial lease as part of the consideration for the premises, so if the rent is taxable, GST applies to them. A separately provided service, billed on the tenant’s use, can be a different supply.
Can I claim GST on council rates and land tax?
No, because they usually carry no GST. You still charge GST when you recover them from the tenant under the lease, as they are part of the taxable supply of the premises.
Does a tenant claim the GST in the rent?
A tenant can claim it if the tenant and the landlord are both registered, or required to be registered, for GST, and the premises are used for the business. Part private use means only the business part.
Where Beans fits
The BAS for a leased property is simple only when the books are right: rent in, outgoings recovered, costs coded with the GST in them. Beans keeps the books as you go, so bank lines and receipts are recorded in the right entity’s books as they arrive, whether the unit sits in a trust, a company or your own name. Receipts can be emailed in, and Beans only asks when the call is yours to make. It flags a purchase that is still missing a tax invoice, so you can chase the supplier before the BAS. It works up the BAS from books that are already done, and the BAS waits for your yes.
Sources (all ato.gov.au, checked 15 October 2026): Commercial property, Leasing and renting commercial premises, GSTD 2000/10: are outgoings payable by a tenant under a commercial property lease part of the consideration for the supply of the premises?, GSTR 2000/35: Division 156, supplies and acquisitions made on a progressive or periodic basis, Registering for GST, When you can claim a GST credit, Simpler BAS GST bookkeeping guide, Selling a going concern, Eligibility to use the margin scheme.
General information, not tax advice.