GST on Property in Australia
Taxable Supplies, Margin Scheme Calculations, Input Tax Credits & Settlement Withholding Notices
Service at a Glance
Personalized scope & lodgementWage earners, investment property owners, CGT, crypto & standard returns
100% online video meetings (Outlook Calendar) or in-person
Direct electronic ATO portal lodgement by Registered Tax Agent
Draft explained and authorized by you before electronic submission
- Pre-lodgement draft walkthrough & written client sign-off
- Extended ATO tax agent lodgement deadlines available
- Transparent upfront quoting & zero lodgement without approval
Is GST Payable When Property Is Sold?
A property sale is generally taxable only when made for consideration in the course or furtherance of an enterprise, connected with Australia, and the seller is registered or required to be registered for GST. An exemption or input-taxed treatment may alter the result.
Made for Consideration
The transfer of real estate occurs for monetary payment, asset exchange, or debt extinguishment.
Course or Furtherance of Enterprise
Conducted as part of an active business, commercial adventure, or one-off profit-making venture.
Connected with Australia
The land or real property asset is geographically situated within Australia.
Registered or Required to Register
The seller holds active GST registration or exceeds statutory turnover thresholds ($75k / $150k non-profit).
A private sale of a family home will ordinarily be different from a sale made through a property-development enterprise. However, a single project can still amount to an enterprise. The owner's purpose, activities, organization, scale and commercial character must be considered rather than relying only on the number of transactions.
GST registration and turnover require careful analysis for property projects. The sale price can be significant, but not every property disposal is treated identically for projected GST turnover. Obtain advice before assuming that being unregistered means GST cannot apply.
Existing and New Residential Premises
Existing Residential Premises
The sale or long-term rental of existing residential premises is generally input taxed. The seller does not charge GST, and acquisitions relating to those input-taxed supplies generally do not give rise to GST credits.
New Residential Premises
A taxable sale can arise for new residential premises. Premises may be new because they have not previously been sold as residential premises, were created through substantial renovations, or were built to replace demolished premises on the same land. Building age alone is not a complete test.
Residential premises that would otherwise be new may cease to be new after being used solely to make input-taxed residential rental supplies for a continuous period of at least five years. The precise history and statutory conditions matter. Commercial residential premises, such as qualifying hotels or similar accommodation, follow different GST rules.
What if the Intended Use Changes?
GST credits depend on the extent to which acquisitions are made for a creditable purpose. Construction intended for taxable sale may support credits, while costs connected with input-taxed residential rent generally do not.
If a developer builds to sell but later rents the property, or builds to rent and later changes to a taxable sale, earlier credits and subsequent adjustments may need review. The timing, evidence of intention, actual use and applicable adjustment periods can affect the result.
Keep business plans, finance applications, agent instructions, lease documents, marketing records and board or trustee decisions that support changes in intended use. Accounting entries alone may not establish the property's application.
GST on Vacant Land and Subdivision Projects
Vacant land is not automatically subject to GST. The seller must first satisfy the taxable-supply requirements, including the enterprise and registration tests. Potential residential land, farmland and commercial land can also have specific rules or exceptions.
Potential Residential Land
Vacant land capable of residential use under applicable planning laws. Subject to purchaser withholding when sold to individual buyers.
Farmland & Rural Holdings
Eligible farmland used for farming business for at least 5 years preceding sale may qualify as a GST-free supply if buyer continues farming.
Commercial & Industrial Land
Generally treated as a taxable supply unless sold as an eligible going concern between registered entities.
What Is the GST Margin Scheme?
The margin scheme is an alternative way to calculate GST on an eligible taxable sale of real property. It does not make the sale GST-free and the margin is not simply the accounting profit. Eligibility and the calculation depend on how and when the seller acquired the property and the applicable valuation or consideration rules.
Margin Calculation
GST is worked out as 1/11th of the statutory margin (sale price minus acquisition consideration or approved valuation), not the full sale price.
Acquisition History Restrictions
The scheme is unavailable if the vendor acquired the property through a fully taxable supply without the margin scheme applied.
Written Agreement Mandate
Seller and buyer must agree in writing to apply the scheme on or before settlement (usually via explicit contract clauses).
No Purchaser Input Tax Credit
Purchasers of real estate under the margin scheme cannot claim a GST credit on the purchase price, regardless of their GST registration.
The margin scheme is not available for every sale. For example, the seller's acquisition history may prevent its use. The seller and purchaser must generally agree in writing to apply the scheme on or before the supply is made, subject to limited ATO discretion to allow more time.
A purchaser cannot claim a GST credit for GST included in a purchase price worked out under the margin scheme. The contract, earlier acquisition documents and any valuation are therefore central to a review. A GST margin scheme accountant can calculate the tax position, while the solicitor or conveyancer remains responsible for legal drafting.
How Does GST Withholding at Settlement Work?
Purchasers of certain new residential premises and potential residential land must withhold an amount from the contract price and pay it directly to the ATO. The purchaser pays the remaining balance to the supplier. The withholding amount depends on the transaction and whether the margin scheme applies; it is not necessarily the supplier's final GST liability.
Suppliers of residential premises or potential residential land must generally notify the purchaser in writing whether withholding is required and, when it is, provide the prescribed information. The supplier still reports the taxable sale in its activity statement and receives credit for the amount withheld.
Supplier Written Notification
Vendor serves formal written notice before settlement stating whether withholding is required, supplier ABN, and withholding amount.
Purchaser Lodges Form 1
Purchaser submits ATO Form 1 (GST property settlement notification) to generate a Payment Reference Number (PRN).
Withholding at Settlement
Purchaser withholds 1/11th of contract price (or 7% under margin scheme), remits to the ATO, and provides receipt to vendor.
Vendor BAS Reconciliation
Supplier reports the full sale and gross GST on their Business Activity Statement and receives credit for the amount withheld.
Can Commercial Property or Farmland Be GST-Free?
Going Concern Exemption
Sale of a commercial property with active leases in place can be GST-free if both buyer and seller are registered for GST and agree in writing that the supply is of a going concern.
Eligible Farmland Concession
Land that has been used for a farming business for at least 5 years preceding the supply can be GST-free if the purchaser intends that a farming business be carried on on the land.
Mixed-Use Apportionment
Properties featuring ground-floor retail/commercial premises and upper-floor residential apartments require contract price apportionment for GST calculation.
Commercial property sales can be taxable when the general requirements are met. Some supplies may qualify as GST-free, including an eligible going concern or eligible farmland supplied for continued farming. These treatments have specific conditions and documentation requirements and should not be assumed from the property's label.
Mixed-use property may need apportionment because residential and commercial components can have different GST treatment. Leases, floor plans, valuation evidence and the contractual allocation should be reviewed together.
What Financially Up Reviews
Our GST property accountant services can cover:
The acquisition, intended use and transaction history
Whether the proposed activities constitute an enterprise
GST registration and taxable-supply requirements
The GST character of a proposed purchase, sale or lease
Potential GST credits and change-of-use adjustments
Margin scheme eligibility and calculations
GST withholding, supplier notices and activity-statement reporting
We may request contracts, settlement statements, tax invoices, development plans, lease information, finance documents and previous activity statements. Tax advice before a transaction, detailed project modelling and annual compliance work are scoped according to the matter.
Registered Tax Agent
TPB Registered Agent #26242127
CPA & IPA Specialists
Qualified Accounting & Tax Team
Australia-Wide Support
100% Online & In-Person Appointments
Discuss Your Property Transaction with Financially Up Pty Ltd
Bring the proposed contract, acquisition documents, ownership structure and a summary of how the property has been or will be used. Financially Up can identify the GST questions, review the available information and explain what should be resolved before you proceed.
Frequently Asked Questions
Common questions about GST on Australian property, input-taxed residential premises, margin schemes, and purchaser withholding.
The sale of existing residential premises is generally input taxed, so GST is not added to the price. The property's history and use should still be checked.
Discuss Your Property Transaction
Bring the proposed contract, acquisition documents, ownership structure and a summary of how the property has been or will be used. Financially Up can identify the GST questions, review the available information and explain what should be resolved before you proceed.
Related Property Tax Services
Explore specialized accounting and tax services across our Property Tax Pillar.
Investment Property Tax
Annual rental returns, deduction reviews, and capital works write-offs.
Property Development Tax
Project tax, GST margin scheme, entity accounting and commercial venture reporting.
Property Subdivision Tax
Cost base allocation across lots, backyard subdivisions, and GST requirements.
Property Capital Gains Tax
Calculating CGT on property disposals, 5-element cost base, and clearance certificates.
Property Ownership Structures
Structuring acquisitions across individual names, trusts, companies, and partnerships.
Property Through SMSF
Superannuation rules, LRBA borrowing changes, and business real property acquisitions.