The 10% Goods and Services Tax (GST) is generally included in the price on most sales in Australia. However, not all goods and services are required to include GST due to GST exemptions in Australia, and not all entities, such as SMSFs, are required to be registered, depending on their circumstances regarding SMSF GST registration.

When is an SMSF required to be registered for GST?

SMSFs are required to register for GST if their actual or projected annual GST turnover exceeds $75,000 – the current GST threshold for SMSF registration. The majority of SMSFs only receive income from dividends, distributions, interest and residential rent which are input-taxed sales and so, are not subject to GST.

For this reason, most SMSFs annual GST turnover won’t exceed $75,000. However, some may still opt for a voluntary GST registration for SMSF to claim eligible input tax credits.

Unlike most SMSF income, commercial rental income is subject to GST and forms part of the $75,000 annual turnover.

GST Claim Rates on Common SMSF Expenses

Examples of common SMSF expenses and the percentage that can be claimed on GST, is detailed below:

Nil claimable

• Tax return and activity statement preparation fees
• Audit fees

75% claimable (reduced credit acquisitions)

• Actuarial fees
• Administration fees
• Brokerage
• Investment management fees

100% claimable

• Commercial property expenses

GST implications for SMSFs purchasing commercial property

When a vendor is registered for GST, the GST is added to the purchase price of the property however, the SMSF won’t be able to claim this unless it is also registered.

If the vendor isn’t registered for GST, then GST on the property purchase isn’t applicable.

Purchasing a property using the GST going concern exemption allows the SMSF to avoid paying GST on top of the purchase price as it is considered a GST-free sale.

If this exemption doesn’t apply, GST must be paid on the adjusted property purchase price on which stamp duty is also paid.

To be able to use this exemption, the property must be tenanted and the tenant will continue to rent the property after the sale. The following must also be satisfied: Updated text: The following must also be satisfied:

• Payment or consideration is made
• The buyer and seller have agreed in writing that the sale is a going concern and
• The vendor supplies all things necessary for the continued operation of the business and carries on the business until the day of sale.

GST on residential property developments

Generally, SMSFs cannot claim GST credits on residential property transactions and is not required to add GST on the sale of the property.

There is one exemption though for new residential property.

A property is considered to be new residential property if any of the following apply:

• The property has not been sold as a residential property previously
• It has been created through substantial renovations or
• New buildings replace demolished buildings on the same land

The benefit of this is that GST credits can be claimed on most construction costs. However, the SMSF is also liable for GST on the sale of the property making it essential to understand SMSF GST on property sale obligations when selling.

Is it possible for SMSFs to cancel their GST registration?

If the SMSF’s annual turnover is under the annual threshold of $75,000, you can consider deregistering SMSF from GST.

However, an SMSF may be required to return its previously claimed GST over an adjustment period of up to 10 years. This is depending on the value of assets purchased which the fund has claimed GST.

SMSF GST claim example

ABC Super Fund is registered for GST and has a commercial property. In the 2024 financial year, the SMSF incurred the following expenses (inclusive of GST):

• Accounting Fee – $2,200
• Property repair – $3,300
• Audit fee – $880

The total GST that the ABC Super Fund can claim is $450.

If your clients are planning to purchase commercial property using their SMSF and have concerns about potential GST obligations, please do not hesitate to contact Alex.

If you have any other questions about managing your client accounts, please contact us via info@smsfengine.com.au or use our contact form to leave us a message.