Home – New Forums Money matters ABN and GST advice for commerical lease

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  • #979634
    scotchm
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    Hello

    Recently, I purchased 2 small sized commercial units in a strata building. I am new into commercial leasing. I don’t have an ABN/GST and I work full time.

    I won’t be starting my own business in the future and looking to rent out both the commercial units at say each at $200 a week. The annual rent for both units will be 2 x $200 x 52 = $20,800.

    Looking around the ATO website, GST/ABN is required for gross rent above $50,000 a year. For me, there isn’t a need now for an ABN and GST when letting out the 2 units, when their total rent is about $21,000?

    Do you think it is a good idea to have an ABN / GST? At the moment, apart from the GST requirement which I don’t require to meet, I don’t see a benefit having an ABN / GST apart from say claiming GST credits. I could be wrong?

    If the renter decides to pay $200/week + GST and I do not have an ABN, I will exclude GST and take $200 / week nett and issue a tax invoice stating no GST?

    Any comments/directions will help.

    #1115945
    JacquiPryor
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    Hi Scotchm,

    Am sure an accountant will be along shortly to advise further but what I know is:

    Requirement for an ABN is not relevant to amount of money made. An ABN should be obtained, essentially, if you are operating any activity that you deem as or others will likely deem as a business. In your case, as you are looking at commercial leases – the leasees may be entitled to withhold money from payment to you if you don’t provide them with an ABN. If you are renting commercially, I think it ‘can’t hurt’ to obtain an ABN – you can do this simply in your name, you don’t need to register a business name or anything like that. Then, you’ll have it to provide to your leasees to ensure they don’t withhold additional amounts from payments to you. The ATO has some further information available here.

    GST Registration would be required, Iif you turnover $75000 or more (rather than $50,000) – so this from your post it doesn’t seem that this will be necessary.

    If the renter decides to pay $200/week + GST and I do not have an ABN, I will exclude GST and take $200 / week nett and issue a tax invoice stating no GST?

    The exclusion of GST on an invoice doesn’t really have anything to do with your ABN. You would only ‘include’ GST if you are registered for GST specifically, which is a separate process to obtaining an ABN. So, and again hopefully an accountant will be along soon to confirm – it seems to me an ABN would be an advantage to ensure that your leasees can’t withhold additional monies for failure to quote an ABN, but no need to register for GST. So you would provide an Invoice (rather than Tax Invoice) for your $200 per week, and instead of showing a tax code of “GST” you’d show one of “GNR” to indicated you are not GST Registered.

    Hope the above helps and all the best with it!

    #1115946
    James Millar
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    scotchm, post: 129955 wrote:
    Hello

    Recently, I purchased 2 small sized commercial units in a strata building. I am new into commercial leasing. I don’t have an ABN/GST and I work full time.

    I won’t be starting my own business in the future and looking to rent out both the commercial units at say each at $200 a week. The annual rent for both units will be 2 x $200 x 52 = $20,800.

    Looking around the ATO website, GST/ABN is required for gross rent above $50,000 a year. For me, there isn’t a need now for an ABN and GST when letting out the 2 units, when their total rent is about $21,000?

    Do you think it is a good idea to have an ABN / GST? At the moment, apart from the GST requirement which I don’t require to meet, I don’t see a benefit having an ABN / GST apart from say claiming GST credits. I could be wrong?

    If the renter decides to pay $200/week + GST and I do not have an ABN, I will exclude GST and take $200 / week nett and issue a tax invoice stating no GST?

    Any comments/directions will help.

    The bigger immediate issue I see is that you may have missed claiming a substantial GST credit on the acquisition cost of the properties. Sales of commercial real estate are subject to GST and the vast majority of the time the vendor will be registered. The going concern exemption won’t have applied because you weren’t registered for GST at the time (by the sounds of it). You could be sitting on some big GST credits.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
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