How long you’re providing the accommodation 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 dwelling. This means you'll have GST to pay.
Apartment complexes or pools of managed apartments that are leased to an operator are seen by us as commercial dwellings. Commercial dwellings may also include services along with the accommodation.
GST and renting out commercial accommodation
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:
- large apartment buildings
- serviced apartments.
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 fitouts. 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.