Going Concern or Vacant Possession: GST, Duty and Your Loan
Commercial Property Finance
Going concern · Vacant possession · GST · Transfer duty
Going concern and vacant possession are not automatic GST opposites. The real questions are what enterprise is being supplied, whether the GST conditions are met, what cash has to be available at settlement, what your state or territory charges duty on, and how the lender has instructed the valuation. This guide follows the transaction from the offer and buyer entity through the lease pack, GST funding, duty assessment, valuation, settlement handover and the BAS after settlement.
Quick Answer
Vacant possession does not automatically mean GST is payable, and a tenant in place does not automatically make a sale GST-free. A commercial property sale is GST-free as a going concern only when the buyer is registered for GST, both parties agree in writing by the day of supply, everything needed to run the enterprise is supplied, and the seller carries it on until that day. If the sale is taxable, fund the GST as separate settlement cash unless a lender has approved a facility for it. Duty can be charged on the GST-inclusive value, and the lender's instructions, not the GST label, decide the valuation basis.
What actually changes between going concern and vacant possession?
Going concern is a GST concept; vacant possession is an occupation concept. They often point in different directions, but one does not mechanically determine the other. What changes for the buyer is the GST treatment of the supply, settlement cash, the duty base under the law of the state or territory, the lease and income evidence that survives settlement, and the valuation instructions used by the lender.
Also called: sale of a going concern, supply of a going concern, GST-free going concern. Vacant possession is also described as sold vacant, vacant on settlement or sold without a continuing tenancy.
The phrase "going concern" also has a separate business-valuation meaning. This guide uses the GST meaning. For the terminology split, see going concern explained.
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| Question | Going concern | Vacant possession |
|---|---|---|
| What is being supplied? | Property together with the identified enterprise and everything necessary for its continued operation, such as the leases and related rights for a leasing enterprise. | The buyer receives the premises without continuing occupancy rights. That does not by itself answer whether the GST supply is taxable, GST-free or otherwise treated. |
| Does GST apply? | No GST is payable on the supply if all going-concern conditions are satisfied. | Possibly. GST applies only if the ordinary taxable-supply rules are met and no GST-free, input-taxed or other treatment changes the result. |
| Can the building be physically empty? | Sometimes. A previously leased property can remain part of a leasing enterprise during temporary vacancy while a new tenant is actively sought. A property that has never been leased is different. | Yes. Vacant possession is about what occupation rights the buyer receives at settlement. |
| What cash is needed at settlement? | No GST on the supply if the concession applies, but deposit, duty, legal costs, valuation costs and other settlement items remain. | If the sale is taxable, the buyer needs the contractually payable GST as well as the ordinary settlement cash, unless an approved facility funds part of that gap. |
| How is duty affected? | The dutiable value still follows the law of the relevant jurisdiction, usually the greater of consideration and market or unencumbered value. No GST is payable on a qualifying going concern supply. | If GST is payable, several jurisdictions expressly include it in consideration or dutiable value. Use the current state or territory rules rather than a national shortcut. |
| How does the lender value it? | The lender may instruct a subject-to-lease or income-based analysis where the tenancy is relevant to the security and repayment, but the instruction belongs to the lender. | Owner-occupied property is commonly valued on a vacant-possession basis unless otherwise instructed. An investment property that is temporarily vacant can still require more than one value or leasing assumption. |
Does vacant possession always mean GST applies?
No. Vacant possession tells you that the buyer is to receive the premises without a continuing tenant or other occupancy right. GST asks a different set of questions: is the seller making a taxable supply, is an enterprise being supplied, and does a GST-free or input-taxed rule apply? A seller who is not registered and not required to be registered, for example, does not create a taxable supply merely because a contract says vacant possession. The contract should therefore describe the GST treatment, but the tax result still has to match the actual facts.
Source: Australian Taxation Office, GST at settlement, last updated 3 June 2025, and GSTR 2002/5, read 22 September 2026.Can a physically empty property still be part of a leasing enterprise?
Yes, in a limited but important case. GSTR 2002/5 says a previously leased building can remain part of a leasing enterprise during a temporary vacancy when the owner is actively seeking a new tenant. The ruling distinguishes that from a property that has never previously been leased: advertising an unused building for its first tenant does not by itself mean a leasing enterprise is already operating. This is why a tenant leaving before settlement is a facts-and-evidence problem, not an automatic GST answer.
Source: ATO GSTR 2002/5, including the temporary-vacancy discussion, read 22 September 2026.The phrase going concern also carries a separate business-valuation meaning, and the going concern glossary entry keeps the GST meaning and the valuation meaning apart.
Which route applies if you will occupy, invest, buy from your landlord or occupy later?
Start with what the property and the tenancy will look like on settlement day, then work backwards into tax and finance. A business owner buying vacant premises, an investor buying leases, a tenant buying from its landlord, and a buyer who plans to move in after an existing lease ends can all sign a commercial property contract, but the enterprise being supplied and the lender's repayment analysis can be different.
Five buyer routes
- You will occupy the building from settlement.Expect an owner-occupier lending assessment driven mainly by your business cashflow and a valuation commonly instructed on a vacant-possession basis. Do not assume that vacant possession itself proves GST is payable.
- You are buying a tenanted investment.A leasing enterprise may be capable of going-concern treatment if the conditions are met. The leases, rent, expiry dates, incentives and tenant security also become core credit and valuation evidence.
- You are already the tenant buying from your landlord.The ATO ruling treats a sale of the property to the tenant differently where the identified enterprise is the leasing enterprise, because the lease can merge when landlord and tenant become the same owner. Read buying your premises from your landlord before assuming the ordinary tenanted-building rule applies. A related entity of the tenant buying on genuine commercial terms, with the lease left on foot, is treated differently again.
- You are buying tenanted now but want to occupy later.The seller can still be supplying a leasing enterprise even if you plan not to continue it indefinitely. Separately, your solicitor must deal with how and when the lease ends, and your broker should tell the lender about the future owner-occupation plan.
- You are buying mixed-use or part-let property.The commercial, residential, let, vacant and owner-occupied components may need separate tax, valuation and income treatment. Do not force the whole property into one label just because most of it fits.
Does the company, trust or SMSF named as buyer matter?
Yes. The entity or capacity that receives the supply is the purchaser that must satisfy the GST-registration condition for going-concern treatment. A trading company being registered does not automatically solve a contract signed by a different company, trustee or superannuation fund. If the buyer entity or nominee changes after exchange, ask the solicitor and tax adviser to re-check GST and duty before the change is documented, because the legal recipient and the duty consequences can move with it.
One company can be more than one GST entity. The Legal Practitioners' Liability Committee explains that a company trading in its own right and the same company acting as trustee of a trust, such as its super fund, can hold separate GST registrations, so a sale to the company in its trustee capacity can qualify even where the company in its trading capacity is the tenant. The contract should name the trustee capacity, and the trust documents and registration must be in place.Source: Legal Practitioners' Liability Committee (Victoria), Going Concern FAQ, lplc.com.au, last updated 9 July 2016, read 22 September 2026. Practitioner guidance describing the ATO position and the Victorian standard contract, not an ATO ruling; confirm the current position with a registered tax agent and solicitor.
What if the purchaser changes or a nominee is added after exchange?
Re-check the going-concern agreement against the entity that will actually receive the property. An ATO private ruling accepted a nominated purchaser where the nomination made that purchaser a party to the written sale agreement and a deed separately confirmed the going-concern treatment. That does not mean every nomination automatically works. If the purchaser changes to a company, trustee, SMSF or holding trustee, have the solicitor and registered tax agent re-check the recipient, GST registration, written agreement, duty consequences and finance documents before the nomination or substitution is completed.
Source: Australian Taxation Office, edited private ruling 1051642463084, read 22 September 2026. Private rulings apply only to their stated facts; the example is used here to show why the actual recipient and written agreement need to be re-checked.Does a sale-and-leaseback automatically create a going concern?
No. GSTR 2002/5 includes an example where an owner operating its own business from a building agreed to lease the premises back from the purchaser. The new lease did not turn the property into an existing leasing enterprise that the seller had been carrying on before the sale. A lease created at settlement can matter commercially, but it does not by itself prove the seller supplied a leasing enterprise as a going concern. If this is the structure being proposed, raise it with your broker and solicitor early, because the finance, the new lease and later borrowing against the property all turn on how it is documented.
Source: ATO GSTR 2002/5, sale-and-leaseback example, read 22 September 2026.When is a commercial property sale actually GST-free as a going concern?
A going-concern sale is GST-free only when every condition is satisfied at the required time. In practical terms, the parties need the right purchaser, a written agreement, an identified enterprise, everything necessary for that enterprise to continue, and evidence that the seller kept carrying it on until the day of supply. A label in the contract cannot substitute for missing facts.
The five conditions to test
- 1. The supply is for consideration.There is payment or other consideration for what is supplied.
- 2. The purchaser is registered or required to be registered for GST.The ATO ruling says the effective registration date must be on or before the day of supply. Merely lodging an application is not enough unless the effective date meets that timing.
- 3. Supplier and purchaser agree in writing that the supply is of a going concern.The agreement must exist on or before the day of supply. It does not have to be in the original contract, although resolving it before signing is safer in practice.
- 4. Everything necessary for the continued operation of the identified enterprise is supplied.For a leasing enterprise this can include the leases, related rights and the property itself. For an operating business the necessary things can be different.
- 5. The supplier carries on the enterprise until the day of supply.For property transactions the day of supply will commonly align with settlement when effective control and possession pass, but the contract and transaction facts determine it.
When must GST registration and the written going-concern agreement be in place?
The purchaser's GST registration and the written going-concern agreement must be in place by the day of supply, not necessarily by exchange. The ATO ruling states that the purchaser's effective GST registration must be on or before the day of supply and that the parties' written going-concern agreement must also exist on or before that day. It also says the written agreement need not be part of the original arrangement. That is the legal timing. The practical risk-management answer is earlier: settle the entity, registration and contract allocation before signing where possible, because a late repair leaves less room if the underlying enterprise or documents are wrong.
What should the GST fallback clause deal with?
A GST fallback clause should tell the parties what happens if the sale is later treated as taxable instead of GST-free. The solicitor should address who bears any additional GST, when it becomes payable, what evidence or tax invoice is required, and how the contract deals with interest, penalties, indemnities or other amounts that may not be recoverable as an input tax credit. A change in GST treatment can also change the buyer's settlement cash, duty calculation and finance requirement, so the broker and tax adviser need to know before settlement if the fallback is likely to be triggered.
Source: Australian Taxation Office, edited private ruling 1052215825524, read 22 September 2026, which records a contract containing a GST fallback mechanism. The wording for a particular contract is legal drafting and should be settled by the purchaser's solicitor.What if the tenant leaves or the lease expires before settlement?
Do not assume the concession has automatically failed. If the property was previously leased, the leasing enterprise can continue during temporary vacancy where the seller promptly seeks a new tenant and keeps doing so. Get the tax adviser to review the facts, preserve the agency appointment, listings, enquiries, inspections and refurbishment records, and tell the broker because the valuation and credit view of the income may also change.
What if the tenant is holding over when the lease has expired?
An expired fixed term does not automatically mean the leasing enterprise has stopped. The Legal Practitioners' Liability Committee notes that a going-concern treatment can still be available where a tenant remains in possession after expiry, continues paying rent and the leasing arrangement continues through settlement, provided the other statutory conditions are also satisfied. The exact legal status of a holdover depends on the lease and state law, so have the solicitor confirm the occupation rights and the registered tax agent confirm the GST treatment rather than relying on the expiry date alone.
Source: Legal Practitioners' Liability Committee, Going Concern FAQ, read 22 September 2026. Practitioner guidance, used with the ATO statutory conditions in GSTR 2002/5.What if the property has residential, commercial or different enterprise components?
A mixed-use building may need its price apportioned between its components rather than treated as one supply. A building can contain a commercial leasing enterprise, residential premises that are input taxed, vacant space or an owner-occupied component. GST-free going-concern treatment does not automatically spread from one part to the rest. The price, GST credits, any increasing adjustment and the valuation should follow the actual components and use, with the tax allocation checked before settlement.
A residential tenancy cannot be part of a going concern. The Legal Practitioners' Liability Committee notes that a shop with a residence is a mixed supply, so the price should be apportioned in a special condition on a reasonable commercial basis, such as rents, council values or a valuer's appraisal, following ATO ruling GSTR 2001/8.Source: Legal Practitioners' Liability Committee (Victoria), Going Concern FAQ, lplc.com.au, last updated 9 July 2016, read 22 September 2026. Practitioner guidance describing the ATO position and the Victorian standard contract, not an ATO ruling; confirm the current position with a registered tax agent and solicitor.
If GST is payable, how do you fund it and when can you claim it back?
Treat GST as a settlement cashflow problem first and a tax-credit question second. If the contract makes the buyer responsible for GST on a taxable commercial-property sale, the buyer needs that amount available at settlement unless the approved finance structure expressly covers it. An eligible input tax credit can later reduce the economic cost, but the refund is not the same thing as settlement funding.
Total settlement price before other adjustments = GST-exclusive price + GST.
An eligible GST credit is claimed under the normal BAS rules, subject to registration, creditable purpose, tax-invoice and attribution requirements.
If a $1,000,000 commercial property sale is fully taxable and the contract price is GST-exclusive, the GST component is $100,000 and the GST-inclusive amount is $1,100,000 before deposit credits, duty and settlement adjustments. The buyer should not assume the $100,000 disappears at settlement or is automatically included in the property loan. Whether the buyer later claims a $100,000 input tax credit depends on the GST rules applying to that buyer and transaction.
Can a lender finance the GST?
Sometimes. The core commercial-property facility may be sized against the property value and the borrower's repayment capacity rather than the temporary GST cashflow. Separate short-term GST facilities also exist in the Australian market and can sit alongside a commercial or SMSF property loan, with repayment expected from an eligible BAS refund. The useful question for the broker is not simply "will the bank fund GST?" but "what facility, security, term and repayment source have actually been approved for the GST component?"
Short-term GST loans are currently marketed by some non-bank and private lenders. Product availability, pricing and policy change, so confirm what has actually been approved before exchange.Plan the GST alongside the deposit on a commercial property loan and the rest of the cash you need at settlement, not as an afterthought to them.
When can you claim the GST back?
A buyer can claim the GST back only to the extent the purchase is creditable and the normal GST rules are satisfied. A registered business buying for a creditable purpose can generally claim an input tax credit, but timing depends on its BAS cycle and attribution requirements. Keep the tax invoice and settlement statement. Do not treat "I have an ABN" or "the contract says plus GST" as proof of a refund.
The deferred GST scheme does not help with a property purchase. It is sometimes suggested for the timing gap, but the tax office describes it as a scheme for GST on taxable imports.Source: Australian Taxation Office, Deferred GST, ato.gov.au, read 22 September 2026.
When might you not get the GST back?
Common reasons include the acquisition not being for a creditable purpose, private or input-taxed use, an entity mismatch, or the transaction using the margin scheme. The ATO expressly says a purchaser cannot claim a GST credit for GST in the purchase price when the margin scheme applies. If the property is mixed commercial and residential, the credit can also require apportionment rather than an all-or-nothing answer.
Source: Australian Taxation Office, Purchasing property using the margin scheme, read 22 September 2026.An existing tax debt is a separate risk. An existing debt can absorb a refund you were counting on, and an outstanding GST or tax debt can block a settlement on its own, so deal with it before exchange.
Is GST withheld at settlement on commercial property?
Ordinary commercial property is excluded from the purchaser GST-withholding regime that applies to new residential premises and certain potential residential land. That exclusion does not mean the sale itself is GST-free. It only means the residential-property withholding mechanism is not the way GST is paid on an ordinary commercial property sale. Mixed-use or development land can require separate checking.
Source: Australian Taxation Office, GST at settlement, last updated 3 June 2025, read 22 September 2026.Does GST change commercial property duty around Australia?
Yes, it can. Where GST is payable, several state and territory sources expressly put that GST inside the consideration or dutiable value. A GST-free going-concern treatment can therefore affect more than the GST cashflow, but duty is separate state or territory law and the saving should never be assumed from a national rule. Calculate duty using the jurisdiction's current method and the actual dutiable value.
Do not use GST × marginal duty rate as a universal shortcut because progressive thresholds and flat-rate regimes can change the result.
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| Jurisdiction | Current position relevant to GST | What the buyer should do | Primary source |
|---|---|---|---|
| New South Wales | Revenue NSW states that duty is payable on total consideration including GST, and the dutiable value is the greater of consideration and unencumbered value. | Use the GST-inclusive consideration where GST is payable and check any valuation requirements. | Revenue NSW, DUT 047. |
| Victoria | The SRO says dutiable value is generally the greater of the price paid and market value, and the price paid includes GST payable on the transaction. Separately, where land is sold with a business above $1 million, Ruling DA-029 requires a valuation, and land that is owner occupied or leased on terms that are not at arm's length is valued on its potential market rent. | Model duty on the GST-inclusive price where GST is payable, subject to the market-value test. | State Revenue Office Victoria, Understanding dutiable value; Revenue Ruling DA-029, issued 1 August 2004, current, read 22 September 2026. |
| Queensland | Queensland Revenue Office says that where GST is a separate additional component, dutiable value is the greater of consideration plus GST and unencumbered value. Its ruling also addresses evidence where a GST gross-up clause exists but no GST is ultimately payable. | Give the solicitor the GST evidence early and follow the ruling's assessment timing rather than assuming the contract label is enough. | Queensland Revenue Office, Public Ruling DA011.1.1. |
| Western Australia | WA says that if GST is payable on a transaction, dutiable value includes the GST amount. | Use the current WA transfer-duty assessment rules and rates for the GST-inclusive dutiable value. | WA Department of Treasury and Finance, Transfer duty assessment. |
| South Australia | RevenueSA states that if GST is included as part of the consideration, stamp duty is payable on the GST-inclusive amount. | Confirm the consideration and any market-value issue before settlement. | RevenueSA, Stamp duty document guide. |
| Tasmania | The State Revenue Office transaction information form requires the contract consideration and total consideration to include GST where GST is payable. | Record the GST-inclusive consideration in the duty information supplied for assessment. | Tasmanian SRO, Duty Transaction Information Form. |
| Australian Capital Territory | ACT Revenue says conveyance duty is calculated using the greater of purchase price and market value. From 1 July 2026, commercial property with dutiable value up to $2.1 million has no conveyance duty, while a dutiable value above $2.1 million attracts a 5% flat rate. The public ACT Revenue page reviewed for this guide does not separately spell out a GST component. | Have the solicitor confirm how the contract's GST amount feeds the transaction value before relying on a duty estimate, especially around the $2.1 million threshold. | ACT Revenue, About conveyance duty. |
| Northern Territory | The Stamp Duty Act defines consideration for a conveyance without any deduction or discount for GST payable on the supply of the property conveyed. | Use the current NT duty rules and treat GST as part of consideration where it is payable. | Northern Territory legislation, Stamp Duty Act 1978. |
What duty mistake happens after the GST answer is settled?
The buyer solves the ATO question but forgets the revenue-office question. GST treatment and duty assessment run under different legislation, often with different documents and deadlines. Queensland is a clear example: its ruling says evidence can matter before duty is assessed where a contract has a GST gross-up clause but no GST is in fact payable. Put duty evidence on the post-exchange checklist instead of treating it as a settlement-day calculation.
Duty deadlines run on the revenue office's clock, not the settlement calendar, which is the same problem as a settlement window closing against a duty deadline. Diary the assessment and evidence dates at exchange.
What if GST pushes the dutiable value across a threshold?
If GST pushes the dutiable value across a threshold, the duty effect can be far larger than a simple percentage of the GST component. The ACT is the clearest current example: from 1 July 2026, commercial property with a dutiable value of $2.1 million or less pays no conveyance duty, while above that threshold a flat 5% applies to the whole transaction value, not just the amount over the threshold. Where the GST forms part of the value, crossing that line changes the duty from nothing to 5% of the entire price. Progressive state schedules can also move part of the value into a different bracket. Run the full duty calculation twice rather than multiplying GST by one marginal rate.
What if the building is part-let or a tenant leaves before settlement?
A partly leased building can still qualify as a going concern where the enterprise genuinely continues. ATO material recognises a partly tenanted building where the vacant area is actively marketed for lease or is undergoing repairs or refurbishment, provided the necessary leases, agreements and covenants transfer. The customer risk is evidentiary: "vacant but being leased" has to be demonstrated, not asserted after the event.
What can support the vacant part of a part-let building?
The ATO's public guidance identifies two relevant states for the vacant component: it is actively marketed for lease, or it is undergoing repairs or refurbishment. Keep the agency appointment, listings, enquiry history, inspection records, works scope, invoices and timeline. A quiet empty floor with no letting activity and no works is materially harder to reconcile with an enterprise being carried on.
Source: ATO GSTR 2002/5 and ATO property guidance, read 22 September 2026.Evidence that reads clean
- Executed leases, variations, options and incentive documents reconcile to the rent schedule
- Vacant space has an agency appointment, live marketing and enquiry or inspection records
- Refurbishment has a documented scope, contractor evidence and invoices
- The enterprise continues through the day of supply
- The actual purchasing entity has the required GST status by the day of supply
- The written going-concern agreement exists by the day of supply
- Tenant security deposits, bank guarantees, arrears and outgoings can be traced and handed over
Facts that need attention
- Space is simply empty with no leasing campaign and no works underway
- A letting campaign is claimed but there is no appointment, listing or activity file
- The rent roll conflicts with executed leases, incentives or bank receipts
- A lease expires and nobody tells the tax adviser, solicitor or lender
- The buyer entity changes after exchange without re-checking GST and duty
- A late contract variation is treated as if it can create an enterprise that does not exist
- Tenant guarantees or security deposits cannot be produced for handover
What does a lender do with part-let income?
The lender can recognise the leased income and still be conservative on the vacant component. The valuation may use current rent, market rent, lease expiry, incentives, reletting assumptions and vacancy risk, while the credit team separately asks how the debt is serviced. For a business owner occupying part of the building, the business cashflow can be as important as the rent from the let area. See how lenders read an owner-occupied part-let building and how your tenant can affect LVR.
What does the structure do to valuation, serviceability and LVR?
The tax label does not itself set the loan amount. The lender decides how the property is valued and how repayment is assessed. An investor loan that depends on property cashflows is read differently from an owner-occupier loan serviced mainly by the trading business, even when the same building is the security. Going-concern documents matter because they prove the lease and income position, not because the words "going concern" force a particular valuation.
How does an investor file differ from an owner-occupier file?
APRA's prudential guidance distinguishes commercial property exposures that are dependent on property cashflows from those that are not. Where repayment depends on the property, lease or rental payments and the sale of the property can be central. Where an SME loan is secured by commercial property but serviced from the business's operating revenue, the business cashflow can be the primary repayment source. That distinction helps explain why the same property can produce different lender questions for an investor and a business owner.
Source: APRA, APG 112 Capital Adequacy: Standardised Approach to Credit Risk, current guidance read 22 September 2026. This is prudential guidance to ADIs, not a promise of lender policy.Which valuation basis will the lender use?
The lender's instructions decide which valuation basis the valuer uses. Australian Property Institute guidance says owner-occupied property, including related-entity occupied property, should be valued on a vacant-possession basis unless otherwise instructed, and that mortgage-security valuation instructions are ideally received from the lender. A tenanted investment may require a subject-to-lease or income approach, while a lender can also ask for alternative values or assumptions where occupation is changing.
Source: Australian Property Institute, valuation protocols and ANZVGP 112, effective 1 January 2025 guidance, read 22 September 2026.The commercial property LVR page sets the vacant possession, subject-to-lease and going concern bases side by side, and the going concern valuation note covers how the income is read.
Which documents support both the tax file and the loan?
The useful pack goes beyond a rent roll. Give the lender and advisers the executed leases, variations, options, incentives, rent review clauses, tenant guarantees or bank guarantees, security deposits, current rent schedule, arrears, outgoings, property-management agreement, re-letting evidence for vacant areas, and the contract GST clause. These documents answer three separate questions at once: what enterprise is transferred, what income survives settlement, and what risks the valuer and credit team need to price.
What does the lender or valuer actually check in the lease?
A lender or valuer reading a commercial lease is testing whether the advertised income is real, durable and transferable. A long lease headline is not enough. The file needs to reconcile the passing rent to the executed documents, compare it with market rent, account for incentives and outgoings, identify expiry and option risk, and show whether arrears or weak security make the cashflow less reliable. For multi-tenanted property, WALE is useful only after the underlying leases and income have been verified.
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| Item | What to verify | Why it changes the credit or valuation view |
|---|---|---|
| Lease term, expiry and options | Executed commencement and expiry dates, option mechanics, notices and any holdover. | Shows how long the current income is contractually supported and when vacancy or re-letting risk starts. |
| Passing rent versus market rent | Current enforceable rent, rent reviews, market evidence and whether the property is over-rented or under-rented. | A headline rent above market can fall at review or re-letting; market rent can matter more than the brochure number. |
| Incentives and side agreements | Rent-free periods, fit-out contributions, side letters, abatements and incentive deeds. | They can reduce effective income even where the face rent looks strong. |
| Arrears and tenant security | Rent ledger, payment history, bank guarantee, security deposit and guarantor position. | Tests whether the income is actually being paid and what protection exists if the tenant defaults. |
| Outgoings and recoveries | What the lease makes recoverable, recent reconciliations and costs the owner must bear. | Net income, not gross rent, is what usually supports an investment valuation and debt service. |
| WALE and concentration | Weighted average lease expiry together with each tenant's share of income and covenant strength. | A respectable portfolio average can hide one near-term expiry or one tenant carrying most of the rent. |
See also what a commercial valuation actually tests and how your tenant can affect LVR. Current lender guidance also commonly asks for tenancy schedules covering lease dates, options, passing rent, outgoings, guarantees and rent adjustments.
From our broking, indicative
On commercial purchases, the problems that surface late are often document problems rather than headline borrowing-capacity problems.
- A rent roll is not a substitute for the executed lease pack when the lender or valuer needs to verify expiry dates, options, incentives and enforceable rent.
- A tenant leaving between exchange and settlement should trigger three calls: solicitor, tax adviser and broker. The same event can change the going-concern evidence, the settlement obligations and the valuation.
- GST should be modelled as its own line in the settlement sources-and-uses, even if a short-term GST facility is being considered. That prevents an expected BAS refund from being mistaken for cash available on settlement day.
Indicative only, based on commercial purchases Switchboard has placed, as at September 2026. This is not a quote, offer or indication of approval. Actual terms depend on lender policy, valuation, security, borrower cashflow and transaction documents.
What should you do from offer through settlement and the first BAS?
Run the transaction as one joined-up file rather than eight separate professional tasks. The customer journey starts before the offer with price and tenancy wording, then moves through buyer entity, contract allocation, GST registration, valuation, duty, lease verification, settlement handover and the BAS. A change in one lane should be pushed to the other advisers while there is still time to react.
Commercial property purchase sequence
- Before the offer. Ask whether the advertised price is GST-inclusive, plus GST or proposed as a going concern; obtain the lease expiry, options and any known vacancy before comparing total settlement cash.
- Before the buyer is locked in. Confirm the purchasing entity or trustee capacity with the accountant and solicitor. If going-concern treatment is intended, check the entity's GST registration position and whether a nomination or entity change could alter GST or duty.
- Before signing. Have the solicitor allocate the GST risk in the contract, including what happens if the expected treatment fails. Going-concern agreement can legally be documented by the day of supply, but resolving it before signing reduces execution risk.
- Before valuation. Tell the broker the current tenancy, any planned owner occupation, any vacancy before settlement and whether the transaction relies on rent or business cashflow. Supply executed leases and variations, not only a rent schedule.
- Immediately after exchange. Calculate duty using the relevant jurisdiction's rules and give the solicitor the evidence needed for any no-GST treatment or market-value issue. Diary assessment deadlines rather than assuming settlement is the only date that matters.
- During the settlement period. Re-check lease status, rent, arrears, incentives, bank guarantees, security deposits and re-letting activity. If a tenant leaves or an entity changes, circulate the change to the tax adviser, solicitor and broker immediately.
- Before settlement. Reconcile sources and uses: loan proceeds, deposit already paid, GST if payable, duty, legal and valuation costs, adjustments and any short-term GST facility. Confirm every lender condition precedent and insurance requirement.
- At settlement and handover. Transfer the lease pack, tenant security, rent and outgoings information, property-management authority and notices needed so the buyer can actually operate the leasing enterprise or take possession as contracted.
- After settlement. Redirect rent, update the property manager and tenants, retain the tax invoice and settlement statement, lodge the relevant BAS and monitor any refund. If the occupation or leasing plan changes, tell the lender before assuming the original valuation or covenant position still applies.
General information only. GST and duty are tax and legal matters; lender valuation and credit treatment depend on the lender's own instructions and policy.
Scroll the table sideways to see every column.
| Question | Lead adviser | Best time to resolve it |
|---|---|---|
| Is the sale actually a GST-free going concern? | Registered tax agent or accountant, with the solicitor on contract wording. | Before signing where possible, then re-check if facts change before settlement. |
| Is the correct purchasing entity registered or required to be registered? | Accountant or registered tax agent. | Before the buyer entity is locked into the contract; legal deadline is tied to the day of supply. |
| Who pays GST if the expected treatment fails? | Solicitor or conveyancer. | Before signing. |
| What duty applies and what evidence does the revenue office need? | Solicitor, using the relevant revenue office rules. | Immediately after contract execution, not the day before settlement. |
| What valuation basis and repayment assessment will the lender use? | Broker or lender. | Before valuation is instructed. |
| How is a GST shortfall funded? | Broker or lender for facility options; accountant for expected credit timing. | Before exchange if settlement cash is tight. |
| What happens if the tenant leaves, rent changes or the buyer entity changes? | Tax adviser, solicitor and broker together. | As soon as the change is known. |
What has to be handed over besides title?
The operational handover matters because the buyer is taking either an enterprise or an occupiable asset, not just a land registry entry. For a tenanted property, reconcile leases, variations, options, incentive deeds, guarantees, bonds or security deposits, arrears, prepaid rent, outgoings, tenant correspondence, property-manager authority and any re-letting file. If the building is vacant, reconcile keys, access systems, services, insurance, possession and any works or leasing campaign that forms part of the tax evidence.
What happens after settlement?
The customer usually moves from "will this settle?" to three new searches: "when do I get the GST credit?", "what do I do with the tenant and rent now?", and "will the lender care if I change how the property is occupied?" Keep the tax invoice and settlement statement for the BAS, issue the required tenant and property-management directions, and tell the lender before replacing a major tenant, occupying a previously leased property or making another change that could affect the security or covenants.
What happens if the going-concern treatment fails after settlement?
If the going-concern treatment fails after settlement, the contract's GST allocation becomes critical. If the ATO later concludes the supply was taxable rather than GST-free, the supplier can have a GST liability and then look to the contract to determine whether that amount can be recovered from the purchaser. Penalties and interest are separate from an ordinary input tax credit. This is why the solicitor should read the GST gross-up and indemnity wording before signing instead of treating "going concern" as a descriptive label.
Going concern and vacant possession answer different questions. A GST-free going concern depends on the statutory conditions and the enterprise actually supplied, while vacant possession describes the occupation delivered to the buyer. A previously leased building can remain a leasing enterprise during temporary vacancy, and an expired lease can require separate analysis where the tenant is holding over. The purchaser's GST registration and written agreement have legal timing tied to the day of supply, and a late clause cannot manufacture an enterprise that is not there. If the purchaser or nominee changes, re-check the recipient and written agreement. If GST is payable, model it as separate settlement cash and confirm whether any GST facility is approved. If an input tax credit is expected, check that the purchase is creditable and that the margin scheme or mixed use does not change the result. Duty must then be calculated under the relevant state or territory rules, and the lender's valuation basis must come from its instructions rather than the GST label.
Key takeaway: solve the transaction in this order - buyer and enterprise, contract and GST, valuation and loan, duty and settlement cash, lease handover, then BAS. The costliest mistakes happen when one of those files changes and the other advisers are not told.Under the standard Law Institute of Victoria contract, the Legal Practitioners' Liability Committee explains, a buyer pays GST on top of the price if the words going concern are in the contract and the requirements are not met, whether or not plus GST also appears, and no input tax credit is available for penalties or interest passed on. Standard contracts in other states are worded differently, so have your solicitor read the clause in your own contract.Source: Legal Practitioners' Liability Committee (Victoria), Going Concern FAQ, lplc.com.au, last updated 9 July 2016, read 22 September 2026. Practitioner guidance describing the ATO position and the Victorian standard contract, not an ATO ruling; confirm the current position with a registered tax agent and solicitor. The contract condition is as described at that date; check the current edition.
Frequently asked questions
Yes, if what is supplied is an operating enterprise rather than property by itself and all of the GST going-concern conditions are met. The supply must be for consideration, the purchaser must be registered or required to be registered for GST, the parties must agree in writing that the supply is of a going concern, everything necessary for the identified enterprise must be supplied, and the supplier must carry that enterprise on until the day of supply. Whether a particular sale meets those tests should be checked by a registered tax agent.
No. Vacant possession describes the occupation rights delivered at settlement; it is not itself a GST test. A vacant sale may be taxable if the ordinary taxable-supply rules are met, but a sale can also be non-taxable for another reason, and a previously leased property can sometimes remain part of a leasing enterprise during temporary vacancy while the seller actively seeks a new tenant. The contract and the actual facts both matter.
Sometimes. The ATO ruling says a leasing enterprise can continue during a temporary vacancy where the property was previously leased and the owner is actively seeking a new tenant. By contrast, merely marketing a property that has never been leased does not by itself create a leasing enterprise. Keep evidence of the prior lease, the letting campaign and any refurbishment if vacancy occurs before settlement.
The purchaser must be registered or required to be registered for GST on or before the day of supply. The ATO ruling says merely lodging an application is not enough unless the effective registration date is on or before that day. In practice, confirming the correct purchasing entity and its registration before signing is safer because it leaves time to fix entity or registration problems before settlement.
Potentially, yes. The ATO ruling says the supplier and recipient must have a written agreement that the supply is of a going concern on or before the day of supply, and that agreement does not have to be contained in the original contract. That does not mean a late variation fixes missing facts: the enterprise still has to exist, everything necessary still has to be supplied and the other conditions still have to be met.
It means the advertised amount is expressed before any GST that is legally payable under the transaction. It does not prove that GST will ultimately be payable. The final treatment depends on the contract and the GST rules, including whether the sale is a taxable supply, a GST-free going concern, subject to the margin scheme or otherwise treated differently. Have the GST clause checked before relying on the listing wording.
No. A purchaser generally needs to be registered and acquire the property for a creditable purpose, and the normal tax-invoice and attribution rules still matter. The ATO also says a purchaser cannot claim a GST credit for GST in the purchase price where the margin scheme applies. Mixed or non-creditable use, including input-taxed residential use, can also reduce or eliminate the credit.
Sometimes. Do not assume the main commercial-property facility will fund the GST, because the lender may size that facility against the property value rather than the temporary tax cashflow. Some specialist lenders offer short-term GST facilities that sit beside the property loan and are repaid when an eligible BAS refund arrives. Confirm the structure, amount and repayment source before exchange rather than trying to solve the shortfall at settlement.
In several jurisdictions the published position expressly includes GST in the consideration or dutiable value where GST is payable, including New South Wales, Victoria, Queensland, Western Australia, South Australia, Tasmania and the Northern Territory. The ACT calculates duty on the greater of purchase price and market value, but the current public ACT Revenue material reviewed for this guide does not separately explain the GST component. Duty is state and territory law, so confirm the transaction-specific assessment with the relevant revenue office or your solicitor.
That can change both the tax evidence and the lender's view of the property, but it does not automatically destroy going-concern treatment. The ATO ruling recognises that a previously leased property can remain a leasing enterprise during temporary vacancy if the seller is actively seeking a new tenant. Tell the solicitor, tax adviser and broker as soon as the tenancy changes, and keep the re-letting evidence rather than waiting until settlement.
Potentially. The ATO ruling says the recipient's intended use after the supply does not by itself determine whether the seller supplied a going concern. However, ending or changing the lease after settlement is a separate legal issue, and a lender may instruct the valuation differently if owner occupation is planned. Raise both points before exchange so the tax, lease and finance positions are not working from different assumptions.
No. A new lease created at settlement does not automatically turn an owner-occupied property into an existing leasing enterprise. The ATO ruling includes an example where an owner operating its own business agreed to lease the building back from the purchaser, but the property was still only an asset of that business rather than an existing leasing enterprise being supplied. The identified enterprise and what is actually transferred must be analysed, not just the lease created at settlement.
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