GST on Commercial Property Sales & Going Concern Exemption

GST on Commercial Property Sales: How the Going Concern Exemption Works

This article explains how GST applies to the sale of commercial property in Australia and what is required for a sale to qualify as a GST-free going concern. Our insights are based on our experience as commercial real estate agents in Brisbane and on the Gold Coast, advice from accountants and solicitors, and the practical impacts on buyers and sellers.

The Key Points at a Glance

GST usually applies

Commercial property sales generally attract 10% GST when the seller is registered (or required to be registered) for GST. Prices are typically quoted GST exclusive.

Going concern = GST free

A leased property sold with its lease in place can qualify as a going concern, making the sale GST free when strict ATO conditions are met.

Real savings for buyers

A GST free sale means less cash needed at settlement and lower transfer (stamp) duty, because Queensland duty is assessed on the GST-inclusive price.

Is GST Applicable to the Sale of Commercial Property?

In Australia, Goods & Services Tax (GST) generally applies to the sale of commercial property if the seller is registered or required to be registered for GST. However, GST may not apply in specific cases, such as:

When the seller is not registered and not required to be registered for GST.
If the sale qualifies as a going concern (discussed below).

Does GST apply to your commercial property sale?

Is the seller registered, or required to be registered, for GST?

No: GST does not apply to the sale. Yes: continue to step 2.

A seller should be registered when their GST turnover, including commercial rent from the property, is $75,000 or more. A seller may not need to be registered where turnover is below that threshold, or where the property is used for residential purposes (even on commercially zoned land), because residential rent does not count towards GST turnover.

Does the sale meet all of the going concern conditions?

Yes: the sale is GST-free as a going concern. No: continue to step 3.

All conditions must be satisfied: the property is leased at settlement (or any vacant portion is actively marketed for lease or being refurbished for leasing), the buyer is also GST registered, the seller, buyer and tenant are separate legal entities, and the contract states in writing that the sale is a going concern. The full checklist is set out below.

GST applies to the sale

Outcome: 10% GST is added to the contract price.

The buyer funds the GST at settlement and Queensland transfer duty is assessed on the GST-inclusive price. A GST-registered buyer can generally claim the GST back through their Business Activity Statement, so for most buyers it is a cash flow cost rather than a permanent one, but the duty on the GST component is not recoverable.

Simplified overview only. Always confirm your position with your accountant and solicitor.

Is GST Included in the Commercial Property Sale Price?

Agents typically communicate commercial property sale prices as GST exclusive amounts. This ensures consistency, as the stated price remains the same regardless of whether GST applies.

REIQ contracts have dedicated sections specifying whether the contract price is:

Exclusive or inclusive of GST, or
Part of a going concern sale (GST-free).

Important note: Queensland Valuation and Sales (QVAS), the Queensland Government property sales database, records sale prices as GST-inclusive figures, without specifying whether GST was applied. When researching comparable commercial property prices, keep in mind that recorded figures may be 10% higher than the GST-exclusive contract price.

When Must a Seller Register for GST?

As at August 2026, a business must register for GST when its GST turnover reaches $75,000 (gross income, excluding GST) in a rolling 12-month period. For a commercial property owner, rent from commercial premises counts towards GST turnover, while income from residential rent does not. Most commercial property owners are GST-registered due to the business structures involved, but in some cases a seller may not be required to be registered, and GST would then not apply to the sale.

What Is a Going Concern in Commercial Property?

In commercial property, a going concern is the sale of a leased property as a continuing rental business rather than as a bare asset. The property is sold with its lease, tenant and rental income in place, so the buyer takes over an operating leasing enterprise from the day of settlement. When the ATO's conditions are met, a going concern sale is GST-free, meaning no GST is added to the purchase price.

To be eligible for GST-free going concern treatment:

Going concern checklist: all five must be satisfied

The seller is registered (or required to be registered) for GST.

The buyer is registered (or required to be registered) for GST at settlement.

The property is leased at settlement, or if partially leased, the vacant portion is actively marketed for lease or undergoing repairs or refurbishment for leasing.

The seller, buyer and tenant are separate legal entities. If the buyer is the sitting tenant, the lease ends at settlement, so the leasing enterprise is not carried on and the sale generally cannot qualify.

The contract states in writing that the parties agree the sale is a supply of a going concern.

ATO Definition of a Going Concern Sale

"You are selling a 'going concern' if the:

sale includes everything that's necessary for the continued operation of the business
business is carried on by you until the day of sale."

"Property that's part of a sale of a going concern can include any of the following:

the business property, when sold together with the assets and operating structure of the business
a fully tenanted building, where the property and all leases, agreements and covenants are included in the sale
a partially tenanted building, where
- the vacant part of the building is either actively marketed for lease or undergoing repairs or refurbishment
- all leases, agreements and covenants are included in the sale.

The sale of a property by itself isn't regarded as a going concern."

Source: ATO - Selling a going concern

Benefits of a GST-Free Sale for Buyers & Sellers

A going concern sale can provide significant financial advantages, including:

Lower upfront costs for buyers. Buyers do not need to fund an additional 10% at settlement, which improves affordability and cash flow.
Reduced transfer (stamp) duty. In Queensland, transfer duty is calculated on the GST-inclusive price, so a GST-free sale is assessed on a lower amount.
A larger buyer pool and stronger offers. Because buyers avoid GST-related financing and the extra duty, GST-free properties can attract more competition and higher offers.

Worked example: $1,000,000 contract price (GST exclusive)

How the same property compares at settlement

Taxable sale (GST applies)

Buyer pays at settlement: $1,100,000 ($1,000,000 plus $100,000 GST)

Transfer duty assessed on: $1,100,000

A GST-registered buyer can generally claim the $100,000 back through their BAS, but must fund it upfront and pay duty on the higher amount.

Going concern sale (GST-free)

Buyer pays at settlement: $1,000,000

Transfer duty assessed on: $1,000,000

No GST to fund, no GST claim to process, and duty is calculated on the lower GST-free price.

Illustrative only. Duty outcomes depend on the transaction and current Queensland Revenue Office rates.

Do Buyers Need to Register for GST?

Most commercial property buyers prefer to be registered for GST because:

It allows them to claim back GST paid on a taxable purchase through their Business Activity Statement (BAS).
It enables them to qualify for a GST-free going concern sale when the other conditions are met.

We recommend discussing your buying entity and GST registration with your accountant before signing a contract.

Which Party Is Responsible for GST Obligations?

The seller is legally responsible for remitting GST to the ATO on a taxable sale, and the contract will typically require the buyer to pay the GST amount on top of the purchase price at settlement.

Contracts for going concern sales also commonly include a clause allowing the seller to recover GST from the buyer if the ATO later determines the sale did not qualify as a going concern. This is one of the reasons both parties should obtain independent advice from an accountant and solicitor before signing.

Expert Advice Is Essential

Consult an accountant early to confirm your GST obligations and the potential benefits of a going concern sale.
Engage a solicitor to ensure the contract correctly documents the going concern agreement and complies with GST law.
Work with experienced commercial real estate agents to structure the sale and marketing for the best outcome.

Frequently Asked Questions

What is a going concern in commercial real estate?

A going concern is the sale of a leased commercial property as a continuing rental business. The property is sold with its lease, tenant and rental income in place, and when the ATO's conditions are met the sale is GST-free, so no GST is added to the purchase price.

Is GST payable when I sell my commercial property?

Generally yes, if you are registered or required to be registered for GST. The main exceptions are where the seller is not required to be registered, or where the sale qualifies as a GST-free going concern with a lease in place and the ATO's conditions met.

Are advertised commercial property prices GST inclusive or exclusive?

Agents typically quote commercial sale prices as GST exclusive so the price stays consistent regardless of the GST treatment. The contract then specifies whether the price is exclusive of GST, inclusive of GST, or part of a GST-free going concern sale.

Do I pay stamp duty on the GST component in Queensland?

Yes. Queensland transfer duty (stamp duty) is calculated on the GST-inclusive consideration. This is one of the key financial benefits of a going concern sale, because duty is assessed on the lower GST-free price.

Can I sell my property to my existing tenant as a going concern?

Generally no, not in the tenant's own name. When the buyer is the sitting tenant, the lease effectively ends at settlement, so the leasing enterprise is not carried on until the day of sale and the sale usually cannot qualify as a going concern. However, the purchase may be structured through a different legal entity, for example a related company, trust or SMSF, so that the lease continues between separate parties after settlement. This structuring must be genuine and set up correctly, so speak with your accountant and solicitor before signing.

What happens if the going concern conditions are not met?

If the ATO determines the sale did not qualify, the seller becomes liable for GST on the sale. Contracts typically include a clause allowing the seller to recover this amount from the buyer, which is why the eligibility conditions should be confirmed with an accountant and solicitor before signing.

Does a vacant commercial property qualify as a going concern?

A fully vacant property sold on its own generally does not qualify, because there is no leasing enterprise being carried on. A partially leased property can still qualify if the vacant portion is actively marketed for lease or undergoing repairs or refurbishment for leasing, and all leases are included in the sale.

Does the buyer need to be GST registered for a going concern sale?

Yes. The buyer must be registered, or required to be registered, for GST at settlement. Buyers should confirm their purchasing entity's registration with their accountant well before settlement.

Other GST Issues Relating to Commercial Property

For more insights, check out our related articles:

Final Note

This article provides general guidance on GST and commercial property sales as at August 2026. It is not intended as legal or financial advice. Buyers and sellers should obtain independent professional advice before making decisions.