Rental Income Concepts

   Rental Income Concepts

Residential Rent

Commercial Rent

GST doesn't apply to residential rent. You're not liable for GST on the rent you charge, and you can't claim any GST credits for associated expenses.

Sale and Lease of commercial residential premises is subject to goods and services tax (GST).

Examples: Other than Commercial Resident, Retirement villages.

Examples: Hotels, Motels,

Hostels, Restaurants etc.


Retirement villages means: Accommodation is intended for people who aged 55 or Above

Rental Income

Rental Income generally on Cash basic sometimes on Accrual basics


What is Rental Statement?

In Australia Property Management Agents will maintain the property behalf of owner, he will Collect Rent from Tenant and Incurred all Expenses related to rental property, for that he takes some agent fees balance money he will send it to Property Owner on Monthly.

So first we need to pass Journal Entry for Rent received from Bank

Bank a/c Dr xxx

To Rental Income xxx


How much Rental Income Received, what are the Expenses Incurred, what is the fees for property agent all those details Property Management Agent will provide property maintain statement, Property owner will receive this statement only at the time of Filing BAS or Filing Year End Tax Return.

 So, for property owner whatever rental income received in Bank is Net Rental Income 


For Example:  

Gross Rental Income

5000

GST on Rental Income

500

Rental Expense

(400)

GST on Expenses

(40)

Reimbursement on Expenses 

100

GST on Reimbursement Expenses 

10

Total (Net off Rental income)

5170

  1. Bank a/c Dr 5170

To Rental Income 5170

(Being Net off Rental Income received)


Once Property Management Statement Received Following Entry will pass

  1. Rental Income a/c Dr 5500

To Rental Income 5000

To GST Collected 500


  1. Rental Expenses a/c Dr 400

GST Payable Dr 40

To Rental Income 440


  1. Rental income Dr 110

To Reimbursement on Expenses 100

To GST on Reimbursement Expenses 10

S. No

Bank Dr

Rental Income Cr

GST Cr

Rental Expenses Dr

Reimbursement 
Rental Income Cr

1

5170

5170

 

 

 

2

 

-5500

500

 

 

 

5000

 

 

3

 

440

-40

-400

 

4

 

-110

10

 

100

 

Total

5000

470

-400

100

 

 

Total Credit Balance=5170 

As per Rental Statement we need to Prepare working paper and we need to Reconcile BAS Return with workpaper

Ultimately above Journal Entries result, will match with the Rental Income received in Bank


In addition to above Expenses if any Expenses Directly incurred by Property owner that expenses also, we need to adjust with rental income.

  1. Rental Expenses Dr xxxx

To Bank xxxx

(Expenses incurred for property)

(Water Rates, Corporate Rates, Land Rates etc)


  1. Rental Income Dr xxxx

To Rental Expense xxxx

(Being Rental Expenses adjusted with Rental income)

Conclusion

Account

Under

Calculation

Balance

Rental Income Cr

Income

(5000-400+100)

4700

GST Cr

Lability


470

Bank 

Asset

(4700+470)

5170

Refer Rental Property schedule