How long you’re providing the accommodation in a commercial property for does not matter. Even if it's on a short-term or permanent basis, the activity is still the provision of accommodation in a commercial property. This means you'll have GST to pay.
Commercial property includes a commercial dwelling, such as an apartment where the property meets all of the following criteria:
- is leased to a resident by a third-party operator
- includes services provided with the accommodation
- the resident doesn't have quiet enjoyment as defined in the Residential Tenancies Act.
GST and renting out a commercial dwelling
Providing accommodation in a commercial dwelling is a taxable supply for GST. This means you'll pay GST if you provide accommodation in, for example:
- serviced apartment buildings managed by a third-party and where the resident doesn't have quiet enjoyment as defined in the Residential Tenancies Act.
Leasing commercial property
All your income from leasing commercial property is taxable.
Using part of your commercial property for long-term residential accommodation is different. When this happens, you’ll have to work out your taxable and non-taxable exempt use for GST.
Deductions and expenses for commercial rental income
You can deduct your rental expenses from the commercial rental income.
Lease inducement payments are financial incentives you give to people you want to take up a commercial lease. These financial incentives can be cash payments or payments towards rent or fit-outs. These are taxable income for your tenant, and deductible payments for you, the landlord.
Lease surrender payments are paid by your tenants to you when they want an early release from their lease. These are deductible payments for the tenant and taxable income for you, the landlord.
You’ll need to keep your commercial rental records for 7 years.
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