How GST Applies to Property Transactions in SMSFs: Strategic Guidance for Advisers

Key Compliance Traps and What Advisers Need to Know

GST obligations can easily be overlooked in SMSFs dealing with property transactions. For advisers and accountants, understanding when GST registration is required, how to claim input tax credits effectively, and how to structure transactions properly can prevent costly compliance mistakes and ATO scrutiny.

When an SMSF Must Register for GST

An SMSF must register for GST if its actual or projected annual GST turnover exceeds $75,000. This is the current threshold for GST registration (ATO).

While most SMSFs earn only dividends, distributions, interest, and residential rent (which are input-taxed and excluded from GST turnover), advisers should pay attention to the following:

• Commercial rental income is subject to GST and counts towards the $75,000 threshold.
• Voluntary registration may be beneficial where significant input-taxed expenses exist, especially for SMSFs holding commercial property.
• Incorrect registration can create unnecessary reporting obligations or result in denied GST credits during an ATO review.

For additional compliance considerations related to structuring SMSF property transactions, see our Related Party Trusts and SMSFs guide.

GST Claim Rates on SMSF Expenses

Understanding what can and cannot be claimed is essential for accurate reporting and avoiding overclaiming:

GST and SMSF Property Purchases

Advisers must also consider GST implications when an SMSF acquires property. For related compliance considerations, review our LRBA reporting and compliance guide.

Additionally, see our guide to claiming depreciation on SMSF rental properties for tax-effective property ownership strategies.

Going Concern Exemption

Commercial property sales may be GST-free under the “going concern” exemption if:

• There’s a written agreement between buyer and seller.
• The property is tenanted at settlement.
• The vendor provides all necessary assets for the business to continue operating.

Advisers should verify documentation and ensure the fund is correctly registered for GST to avoid disputes (ATO).

Residential Property

Residential property transactions are generally input-taxed:

• No GST applies to rent or the sale of existing residential property.
• New residential property is subject to GST, allowing input tax credits for construction costs but creating potential cash flow and timing challenges for SMSFs undertaking property development.

GST Deregistration Risks for SMSFs

If a fund’s GST turnover falls below $75,000, it may consider deregistration. However, advisers should be cautious:

• SMSFs may face input tax credit adjustments for up to 10 years on previously acquired assets.
• Deregistration can trigger compliance reviews if adjustments are incorrectly calculated.

See our EOFY SMSF checklist for advisers for additional guidance.

Practical Example: GST Credit Calculation

ABC Super Fund (GST-registered) holds a commercial property and incurs:

• Accounting fee (Tax return preparation): $2,200 (nil claim)
• Property repairs: $3,300 (100% claimable)
• Audit fee: $880 (nil claim)

Total GST credit claimable: $300.

This example highlights the importance of accurate categorisation of expenses.

Key Compliance Risks for Advisers

Advisers should watch out for:

• Late GST registration when leasing commercial property.
• Incorrect application of the going concern exemption.
• Overclaiming GST credits on reduced credit acquisitions.
• Overlooking input tax credit adjustments after deregistration.

How We Support Advisers with SMSF GST Compliance

Managing GST compliance for SMSFs is complex and requires ongoing technical oversight. Our white-label SMSF administration services can help you:

• Assess GST registration requirements.
• Prepare and lodge GST activity statements.
• Manage input tax credit claims accurately.
• Ensure full compliance with ATO property transaction rules.

Contact us to discuss how we can help with GST compliance and SMSF property administration.