Trustees who register their fund for goods and services tax (GST) in relation to a property acquisition need to take specific actions to enable them to claim associated credits and ensure other parties are registered in the system, SMSF Alliance principal David Busoli has noted.
Busoli said SMSFs holding a non-residential property that generates rent of more than $75,000 a year need to be registered for GST. However, trustees can take the same action even if revenue from a property lease is less than this amount, should it be considered beneficial to do so.
“If the fund is registered and a purchase of commercial property is from a seller who is registered, you’ve got to mention the GST in the purchase contract,” he stated during a presentation at the SMSF Association National Conference 2026 in Adelaide last week.
“The SMSF then, if it is registered and the seller is registered, can recoup 100 per cent of that GST, not 75 per cent, which is the situation with expenses, and that can be lodged in the next business activity statement.”
He added this step may cause a delay in securing finances under a limited recourse borrowing arrangement (LRBA).
“The ATO doesn’t just hand out money. It actually has a look and may well do a mini-GST audit and it could take a little longer than what you might expect,” he pointed out.
“A lot of [LRBA] funders will allow temporary funding over and above their loan-to-value ratio for the GST for six months because the ATO is dragging the chain, but it could be a little concerning if the deal is so skinny that you need that extra time.”
Where an SMSF wanted to treat the property as a going concern to reduce the GST burden, he observed there were specific parameters that had to be met at the time of sale.
“The SMSF and the seller have got to be registered [for GST] and both have to agree in writing it is a going concern, and not just to say so,” he explained.
“The business has got to have everything available to it for the going concern to continue, even though it’s only got to be there to the day of settlement, and there has to be a valid lease in place prior to the sale.
“If you have got those conditions, no GST needs to be included, but be careful here if you have got an individual seller.
“[For example], you have a couple who own a commercial property and they are going to have their super fund buy it from them. [At the same time] they are the tenant.
“You can’t use the going concern exemption in that situation because they are the same entity.”
