Unlocking the GST Exemption: Buying Tenanted Commercial Property in Queensland

When it comes to investing in commercial real estate, there’s a wealth of information to navigate. In the vibrant and growing market of Queensland, there’s a unique and advantageous twist to consider – the GST exemption for tenanted commercial properties. This exemption can make a significant difference for both buyers and sellers, so let’s dive into what makes a property a “Going Concern.”

What is a Going Concern?

In the realm of tax and commercial property, the term “Going Concern” carries special significance. Essentially, it means that the business conducted on the property is ongoing, and the ATO (Australian Taxation Office) views the income generated from the property as akin to purchasing a business. This classification holds particular importance when it comes to the Goods and Services Tax (GST).

The Crucial Lease Agreement

For a property to qualify as a Going Concern, there must be a commercial lease in place. This lease can be as simple as a periodic, month-by-month agreement, but it must be documented in writing. Verbal agreements between the landlord and tenant won’t suffice in this case, as the written lease is the key to categorizing the property as a Going Concern.

Agreeing to the Exemption

To benefit from the GST exemption, both the seller and the buyer must agree to this status in writing before the contract’s settlement. In commercial real estate contracts, there are typically three GST options available, including the exemption. All it takes is a simple checkmark in the “Is this sale of a Going Concern?” box to initiate the process. This step is vital, as it ensures the transaction aligns with the ATO’s criteria.

Why is the Going Concern Status Important?

The GST exemption for Going Concerns has significant financial implications for both parties involved in the transaction. Sellers can attract more buyers by offering the exemption, making their properties more attractive. Buyers, on the other hand, can save on the GST, which can be a substantial financial relief, especially when investing in a high-value commercial property.

For a more comprehensive understanding and specific regulations regarding Going Concern legislation, you can refer to Section 38-325 of the GST Act on the ATO website. This resource provides detailed information and can serve as a reference point for those involved in buying or selling tenanted commercial properties in Queensland.

Ask our expert staff at Only Commercial for more information about investing in commercial real estate.


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