GST on Rent: When Is a Landlord or Tenant Liable?

Renting out a residential property for use as a residence is exempt from GST, full stop, regardless of the landlord's turnover or GST registration status. The confusion begins when a residential property is rented to a business — for instance, a company renting a flat as staff accommodation, or a landlord renting a residential unit to a GST-registered tenant for any business purpose. In that case, the exemption no longer applies straightforwardly, and liability can shift to the tenant under the reverse charge mechanism.

Commercial property rented for business use is more clear-cut: GST at 18% generally applies, and if the landlord is GST-registered, they charge and collect it on the rent invoice in the ordinary way. If the landlord is not registered but crosses the threshold due to rental income (or rental income combined with other business income), registration becomes mandatory and the same 18% liability follows.

A frequent point of dispute between landlords and tenants is who actually bears this cost — the lease agreement should say so explicitly, because the GST law only determines who is liable to the department, not who bears the economic cost between the two private parties. Leases silent on this point regularly end up in disagreement once a GST liability is assessed.

If you're a landlord or tenant unsure whether GST applies to your specific rental arrangement, or drafting a lease and want the GST liability clause to actually protect you, that is worth getting right at the drafting stage rather than after a dispute arises. Our GST & Tax and Civil & Property Law practices jointly advise on this exact overlap.