Leasee GST claims

Question from graeme updated on 26th November 2018:

Our family trust purchased a small town commercial property. The vendor and our trust were not GST registered. We then leased this property for around $10,000 per year with nil GST. Can the leasee who is GST registered claim GST on the lease payments?

Our expert Matthew Gilligan responded:

I will cut to the chase here: Because you are not registered for GST, you are not charging the lessee GST for the use of the property. Accordingly, they are not paying you GST and therefore there is no GST for them to claim on the lease payments.

Matthew heads GRA's specialist property and asset planning division. He helps clients create optimal tax structures and build wealth through property. He has an extensive buy-to-hold property portfolio, is currently involved in over a dozen developments, and is author of two books - Property 101 and Tax Structures 101.

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