The Complete Guide to GST Loans in Australia

A GST loan is short-term financing designed to cover the 10% Goods and Services Tax payable on commercial property purchases. Since most traditional bank loans do not cover this cost, buyers must source the additional 10% themselves. GST loans solve this by providing 100% of the GST amount at settlement. You then repay the loan when the ATO processes your GST refund after lodging your Business Activity Statement.

GST loans are commonly used by property developers building residential or commercial projects, investors purchasing commercial real estate from GST-registered vendors, and business owners acquiring premises for their operations. They are also used for land subdivision projects and development site acquisitions. First-time commercial property buyers often underestimate the GST component and find GST loans essential for completing transactions.

GST applies to new residential premises not previously sold or lived in for more than 5 years. It applies to commercial property sales by GST-registered entities, subdivided land sold as part of a business activity, and development sites. Since July 2018, purchasers of new residential premises must withhold GST from the purchase price and remit it directly to the ATO using Form One (before settlement) and Form Two (on settlement day).

After settlement, you include the GST paid as an input tax credit on your next BAS. The ATO typically processes electronic BAS refunds within 12 business days of lodgement. However, the total wait depends on your reporting cycle. Quarterly reporters may wait up to 120 days if settling just after a BAS period closes. Monthly reporters can access refunds faster, and businesses can elect monthly reporting by contacting the ATO.

Businesses with GST turnover under $20 million report quarterly with BAS due on the 28th of the month following quarter end. Those with turnover over $20 million report monthly with BAS due on the 21st of the following month. Strategic settlement timing can minimise the GST funding gap. Consider settling early in a BAS period to include GST credits in the upcoming lodgement. Monthly reporters particularly benefit from faster access to refunds.

The margin scheme can significantly reduce GST on property sales. Instead of calculating GST as 1/11th of the sale price, GST is calculated as 1/11th of the margin (difference between purchase and sale price). For example, a property purchased for $400,000 and sold for $600,000 would attract GST of $18,182 under the margin scheme versus $54,545 under the standard method. However, buyers cannot claim GST input tax credits on margin scheme purchases.

GST loan applications are typically fast with minimal documentation. You will need to specify the GST amount required, provide the contract of sale and settlement statement, show proof of GST registration if applicable, and supply ABN details. Some specialist lenders offer approval within 24 hours with no credit checks required. Funds are released at settlement and repaid when the ATO refund arrives.