GST and duty on commercial property: what changes the cash at settlement
Two transactions at the same price can need very different amounts of cash on the day. Tax and duty sit between the contract price and the funding requirement, and they are almost always someone else's job to get right.
Commercial property carries tax consequences residential property does not. GST can apply to the sale, transfer duty is charged by the state on a base that may or may not include it, and the borrower's own tax position determines what is ultimately recoverable and when.
None of this is the broker's decision. All of it is the broker's problem, because it changes the funding requirement — and it changes it before settlement, not after. A deal sized on the contract price alone is a deal that comes up short.
GST on the sale
Commercial property sales can be taxable supplies. Whether GST applies, and how the contract deals with it, sits in the contract of sale and is a question for the parties' advisers, not an assumption.
The going-concern treatment
Where a tenanted property is sold as a going concern and the statutory conditions are met, the supply may be GST-free. It depends on the facts and the contract, and it materially changes the cash needed on the day.
The margin scheme
An alternative basis for calculating GST on some supplies. Its availability depends on history and eligibility, and it is agreed in the contract rather than chosen later.
State transfer duty
Charged by each state and territory on its own scales and rules, on a base that may include GST. It is usually payable at or near settlement, in cash, and it is not typically funded by the lender.
Recovery timing
Even where GST is ultimately recoverable by a registered purchaser, the money leaves first and comes back later. The gap is a cash-flow event, not a rounding error.
Other settlement costs
Legal, due diligence, valuation, lender costs and adjustments. Individually small, collectively enough to matter on a tight deal.
The tax outcome belongs to the accountant. The funding consequence belongs to you.
- The lender funds against value, not against costs. Duty, GST timing and settlement costs are generally the borrower's cash, so the equity requirement is bigger than a gearing calculation implies.
- The GST treatment can move the duty base. Which changes the cash figure, which changes whether the borrower can settle.
- A going-concern outcome is not automatic. Conditions have to be met and the contract has to reflect it. Treating it as certain before it is confirmed is how a shortfall appears late.
- Recovery timing creates a genuine gap. Some borrowers fund that gap separately, which is a working-capital conversation attached to a property transaction — see working-capital enquiries.
- Duty differs by state and by asset. Rates, thresholds and concessions are set by each state revenue office, so a national rule of thumb is not one.
- The question is cheap to ask and expensive to skip. "Have you spoken to your accountant about the GST treatment, and do you know the duty figure?" takes ten seconds on the first call.
The authoritative sources are the ATO for GST and each state or territory revenue office for duty. Neither a broker nor a lead provider should be interpreting them for a borrower.
Ask three things and record the answers: is the purchaser registered for GST, how does the contract treat GST, and does the borrower have the duty figure. If any answer is a shrug, the funding requirement is not yet known and should not be quoted as though it is.
Then make the referral explicit. The accountant and the conveyancer answer these questions, and saying so plainly protects the borrower and keeps you inside your lane. It also tends to increase confidence rather than reduce it — borrowers read "that's a question for your accountant, and here's exactly what to ask them" as competence.
Finally, size the deal on the total cash required rather than the price. That is the number the transaction actually turns on, and getting to it early is the difference between a settlement that happens and one that is extended a fortnight while somebody finds the money. Where a date is already driving the deal, the sequencing matters even more — see how long settlement takes.
Business property-purchase finance ran to $27.2b, up 18.9% year on year (ABS Lending Indicators), so a substantial number of these transactions are settling. One tax change worth knowing is the $20,000 instant asset write-off, made permanent from 1 July 2026 for businesses under $10M turnover, passed by Parliament in August 2026 and subject to Royal Assent (aph.gov.au, August 2026) — it does not touch the property itself but frequently affects the fit-out and equipment spend that accompanies a purchase. The detail is in the instant asset write-off in 2026, and it remains a matter for the borrower's accountant.
We do not provide tax advice and nothing here is tax advice. Our enquiries capture property type, approximate value and LVR range with the amount, purpose, timeframe and the borrower's notes — never a tax position.
Commercial finance leads are sold once, to one broker, never resold, delivered in real time. Pay per lead, no lock-in contracts, no setup fees. The lead is an introduction, not a recommendation.