Over the last 12 months, there have been many notable schemes promoted by state and federal governments to assist businesses and individuals with much-needed tax relief. Numerous relief schemes have been put into place to assist those with rent relief for their businesses.
Rent is a major business expense. It is one that many businesses across the country have often had to face in one way or another.
To address the issues that many businesses faced with lockdowns and cashflow issues as a result, some businesses were eligible to apply for rent concessions as a result of the impact of COVID-19, which could be as either a waiver or as a deferral.
In the event that a waiver is the available rent concession, the tenant no longer needs to pay the amount of rent that has been waived.
The tenant is still required to pay the amount of rent deferred, but the amount can be paid at a later stage (in the event that the ruling of the rent concession is as a deferral on payment).
Tenants who receive rent concessions from their landlords and landlords who give rent concessions to commercial tenants need to be aware of the difference between payments that are waived and deferred. Getting the two wrong can be costly, as rent payments are often a significant impact on the cash flow of a business. Missing payment due to a misunderstanding of the rental concession type you may have been afforded could be detrimental.
Property and tax is a tricky subject that goes beyond these rent relief measures and concessions. As the schemes start to dial back, it’s important to remember that tax and your dealings with property is an ongoing conversation you may need to revisit and reacquaint yourself with.
If you own, lease or rent a property that is used for business purposes (whether commercial, such as a shop or an office, or even your own home) you need to be aware of the tax implications and obligations that you will have to fulfil.
If you are in possession of a property that is used in such a manner, you:
- must include any rental income in your tax return
- can claim deductions for some property expenses
- will be liable for capital gains tax on any capital gain if you sell the property
- may have GST obligations and entitlements.
In your dealings with property, you will also likely have additional tax obligations, including those relating to one-off transactions (such as the buying, selling, leasing or developing of property).
This could result in the Australian Taxation deciding that those one-off transactions should deem you as conducting an enterprise. If the turnover from these activities is more than the GST registration turnover threshold (what you are allowed to bring in before reaching a limit), you may be required to register for GST.
Ensure that your tax obligations and consequences are met by consulting with us. We are equipped with the knowledge to assist you. You can also enquire about potential tax concessions surrounding rent and property with us, as there may be more available to you and your business than you might think.