Australian Tax Alert — new ATO interpretative decision: GST and prepaid rent

On 17 May 2013, the ATO issued a new interpretative decision, ATO ID 2013/30, entitled: ‘GST and the sale of commercial premises that are subject to a lease’. This is an important decision that will have implications for all entities that buy or sell tenanted commercial premises.

The lease of commercial premises is a taxable supply and subject to GST, which is payable by the landlord. The decision sets out the Commissioner’s view on whether a vendor of a commercial premises is liable for GST on prepaid rent in circumstances where a tenanted property is sold part way through the month to which the prepaid rent relates.

Note in this context “commercial premises” includes all premises other than residential premises (i.e. office, industrial, commercial, rural and other properties).

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