QB 21/08
Issued
29 Jun 2021

GST - How do the compulsory zero-rating of land rules apply to transactions involving commercial leases?

Section 11(8D) of the Goods and Services Tax Act 1985 contains the compulsory zero-rating of land rules for commercial leases.  This question we've been asked explains how s 11(8D) operates.  It covers various factual situations, including:

  • the exclusion for rents and lump sum payments of 25% or less of the term consideration;
  • stand-alone lease assignments;
  • lease assignments in the context of business asset sales;
  • lease procurement services in the context of business asset sales;
  • lease procurement services where an existing lease is currently continuing on an implied term; and
  • lease procurement services where an existing lease is to be cancelled.

Tax Information Bulletin Vol 33 No 7 – August 2021

Goods and Services Tax Act 1985 sections 2(1) (“land”), 8(1), 11
Property Law Act 2007 sections 207, 209, 210, 245
Taxation (Annual Rates for 2020-21, Feasibility Expenditure, and Remedial Matters) Act 2021 section 184