Who Pays GST on the Sale of Commercial Property?

GST rates and thresholds checked October 2026 against the ATO. GST is 10% of the GST-exclusive price, which is one-eleventh of a GST-inclusive price.

Who pays GST on the sale of commercial property?

The seller is liable. When a seller who is registered, or required to be registered, for GST sells commercial premises such as shops, offices, factories or warehouses as part of its enterprise, the ATO treats the sale as taxable and the seller must report and pay the GST.

Who carries the cost is a separate question, answered by the price in the contract. If the buyer is registered for GST and buying for its own enterprise, it can usually claim the GST back as a credit in the activity statement for the period in which settlement occurs. For most business buyers, GST is then a cash flow cost at settlement rather than a final cost. A buyer who is not registered, such as an individual investor below the registration threshold, cannot claim it back.

GST is a federal tax and sits alongside stamp duty, which each state charges separately; see our guide to stamp duty in Australia. For how a commercial transaction differs from a home purchase more generally, see commercial and residential conveyancing compared.

Is the price plus GST or GST-inclusive?

The contract decides. The ATO says a property contract should state whether the price includes GST and whether the margin scheme applies, and most standard contracts have a GST clause or tick box for this. The wording changes who bears the tax:

On a $2,200,000 GST-inclusive price, for example, the GST component is $200,000. On a $2,000,000 price plus GST, the buyer pays $2,200,000 in total. The ATO also suggests a clause dealing with what happens if the GST treatment in the contract later turns out to be wrong, which matters most when a sale is priced on the basis that it is GST-free.

When is a commercial sale GST-free as a going concern?

A commercial property sale is GST-free when it is the sale of a going concern and every one of the ATO's conditions is met:

• the buyer pays for the supply
• the buyer is registered, or required to be registered, for GST
• the buyer and seller have agreed in writing that the sale is of a going concern
• the seller supplies everything needed for the business to keep operating
• the seller carries on the business until the day of supply, usually settlement

For property, the enterprise is usually the leasing of the building. The ATO accepts a fully tenanted building sold with all its leases, agreements and covenants, and a partly tenanted building if the vacant space is being actively marketed for lease or is undergoing repairs or refurbishment. A completely vacant building is not among its examples, so get advice before relying on the exemption for one. Premises sold together with the business that operates from them can also qualify.

The exemption is easy to lose on a technicality, such as a missing written agreement or a lease that ends before settlement. If the buyer later uses the property differently, for example for residential letting, it may need to make a GST adjustment. Stamp duty is still payable on a going concern sale. Our guide to what happens to commercial leases when a property sells covers the lease side.

How the margin scheme changes the GST

Under the margin scheme, the seller pays GST of one-eleventh of the margin instead of one-eleventh of the whole price. The margin is generally the sale price less what the seller paid for the property, or less an approved valuation of it.

The ATO's own worked example: a registered seller buys land for $500,000 from someone who is not registered for GST, builds on it and sells for $900,000. The margin is $400,000, so the GST is $36,363 rather than one-eleventh of $900,000.

Three rules matter to both sides:

• Written agreement before settlement. The buyer and seller must agree in writing to use the margin scheme, usually through a tick box in the contract.
• No credit for the buyer. A buyer cannot claim a GST credit on a margin scheme purchase, even if registered, so the scheme suits sellers more than registered buyers.
• Not every seller is eligible. A seller who bought the property in a fully taxable sale without the margin scheme cannot use it, and that ineligibility can pass down through later going concern sales.

Our guide to the GST margin scheme on commercial purchases looks at it from the buyer's side.

When there is no GST on a commercial sale

GST applies only when the seller is registered or required to be registered. A seller whose GST turnover is under the $75,000 registration threshold, and who has not registered voluntarily, does not charge GST on the sale. A buyer from that seller has no GST to pay and nothing to claim.

Other common situations:

• Mixed-use property. A building with shops below and existing homes above can be part taxable and part input taxed, because the sale of existing residential premises does not attract GST. The price is apportioned. See buying a mixed-use lot.
• Farmland. Farmland sold for a continuing farming business can be GST-free under separate farmland rules.
• A seller who should have registered but did not. The ATO can require the seller to pay GST on sales made since it was required to register, even if it did not include GST in the price.

If you are not sure whether the seller is registered, the seller's ABN and GST status can be checked before you sign, and the contract should say how GST is treated.

GST withholding on new homes, and why commercial sales differ

Buyers of new residential premises and potential residential land must withhold the GST at settlement and pay it straight to the ATO. Buyers of commercial property do not. On a commercial sale, the seller collects any GST as part of the price and reports it in its own activity statement.

For contrast, where withholding does apply:

• the seller must give the buyer written notice, usually in the contract, of whether withholding applies and the amount
• the amount is generally one-eleventh of the contract price, or 7% of the contract price if the margin scheme applies
• the buyer lodges two ATO forms, which can be done through electronic conveyancing, and pays the withheld amount at settlement

On any purchase of vacant land, check the seller's withholding notice in the contract rather than assuming it does not apply.

GST, stamp duty and settlement

GST also affects the rest of the settlement figures.

• Duty on the GST. Stamp duty is generally charged on the price including GST. Revenue NSW and the WA revenue office both include GST in the dutiable value, so a price plus GST costs more in duty than the same price expressed GST-inclusive.
• Settlement adjustments. The ATO treats adjustments for rates and similar costs as part of the amount paid for the property, so they are included in the GST calculation.
• Tax invoices. A contract of sale is not normally a valid tax invoice, so a registered buyer should ask the seller for one to support its credit claim.
• Timing. Under a standard land contract the GST is reported at settlement, and a buyer cannot claim a credit on the deposit alone.

A commercial conveyancer checks the GST clause and the going concern or margin scheme wording before you sign, and the settlement figures before you settle. See our commercial purchase and commercial sale conveyancing services.

Frequently asked questions

This guide is general information, not legal or financial advice. Rules, fees and timeframes change and differ between states, so confirm your own situation with a licensed conveyancer, settlement agent or solicitor.