Q: Ms. C owns a commercial property with a cottage rented out at the back. The cottage is currently rented, but the main building is available for rent. Does the rent from the cottage attract GST since it's part of the commercial property, or is it considered residential?
A: The cottage is considered residential premises under the GST Act. This means the rent from it is exempt from GST. However, when the main building is leased, its rent will be subject to GST. Since Ms. C will have a mix of taxable and non-taxable income, she'll need to divide any expenses she incurs for the property between the cottage (where no GST applies) and the commercial building (where she can claim GST credits).
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