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INSIGHTS

Rent including GST

You would be surprised how often we receive instructions where the Rent amount is stated as “including GST”.

That’s fine if the GST stays at 10% forever but what if it doesn’t.

Just because the GST rate goes up doesn’t mean that you can increase the Rent, so effectively you will end up getting less Rent in your pocket.

This is how an increase from 10% to 15% would affect you if you had agreed on a Rent including GST.

Let’s use a recent example of a Rent of $96,000 including GST.

$96,000 less 10% GST = $87,272 in your hand

$96,000 less 15% GST = $83,478 in your hand

The difference is $3,794 per year

Say a Lease term of Five years

= a total loss of $18,970 over the term of the Lease.

All because someone didn’t separate the GST from the Rent.

So, the message is: –

Rent is Rent, GST is GST, and you should never mix them together.

As always if you have any questions, please let me know.

Regards

Steve Evans

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© 2020 The Lease Bureau.
All rights reserved.
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