GST on an agent's commission: how it is charged and shown at settlement

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Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

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Most Queenslanders who sell a home never deal with goods and services tax on the sale itself. The price of an established house or unit does not include GST, and nothing is remitted to the tax office out of it. Then the agent's tax invoice arrives, and one line of it shows GST of a couple of thousand dollars.

There is no contradiction. The home and the agent's service are two different supplies, taxed in two different ways. The sale of an existing residence is outside the GST net. The work of selling it is inside. This guide explains how that plays out on a Queensland sale: why commission is taxable, how the tax is folded into the figure on the appointment, how to find it inside a GST-inclusive amount, who can and cannot recover it, how marketing costs are treated, and where each number appears when the sale settles. It describes the general rules. A seller who is registered for GST, or who is selling anything other than their own home, has questions that depend on their circumstances.

Australian Taxation Office guidance on GST and residential premises; Office of Fair Trading guidance on charging commission.

Two supplies in one sale

GST is a tax on supplies made by registered businesses. A real estate agency is a business, and what it supplies to a seller is a service: marketing the property, finding a buyer, negotiating the contract. The commission is the price of that service.

The law firm Colin Biggers and Paisley, in a 2013 note on GST in real estate agencies, puts the rule simply. Where an agent provides a service for a fee and it is a taxable supply, GST applies. The note lists sales commissions and letting fees among the charges covered, together with fees for lease preparation, administration and negotiating a transaction.

The same note states the principle that surprises sellers. The GST status of the property, or of the owner, is irrelevant to the agent's fee. The agent's service is taxable whether the property being sold is taxable, input taxed or GST-free, and whether or not the client is registered for GST.

So a sale of an ordinary established home involves two supplies. The seller supplies the home to the buyer, and that supply carries no GST. The agent supplies a service to the seller, and that supply does.

The Queensland rule: the figure on the form includes GST

Queensland removes the most common source of confusion at the outset. The Office of Fair Trading's guidance on charging commission says the commission must include GST, and the appointment must clearly state this. The Real Estate Institute of Queensland gives its members the same instruction: commission is to be specified as GST inclusive.

The appointment for a residential sale is Property Occupations Form 6. Whatever commission is written there, as a percentage, a fixed sum or a scale, is the total the seller will pay for the agent's service. There is no further tenth to add.

The rule matters because commission is negotiated in conversation before it is written. An agent used to thinking in pre-tax figures and a seller hearing a single number can leave a meeting with two different sums in mind. The form resolves it. The regulator's guidance adds that the commission is set in writing at the time of the appointment and cannot be altered afterwards, so the GST-inclusive figure agreed on the day of signing is the one that applies.

The 2013 note records a general position that points the same way. An engagement agreement should say whether charges are inclusive or exclusive of GST, and where it does not, the fees are presumed to be inclusive. In Queensland the appointment form leaves no room for the question.

Finding the tax inside the figure

GST is charged at 10 per cent of the price of a service before tax. Seen from the other side, the tax is one-eleventh of the price after tax. That one-eleventh rule is all the arithmetic a seller needs.

A worked example makes it concrete. The figures are illustrative and are not market rates. Assume an established house sells for $770,000 and the appointment records a commission of 2.75 per cent including GST.

The commission is 2.75 per cent of $770,000, which is $21,175. That is the amount the seller pays. Dividing by 11 gives the GST inside it: $1,925. The remainder, $19,250, is the agency's fee before tax.

The example also shows what an inclusive rate means when turned around. The agency's fee before tax, $19,250, is 2.5 per cent of the price. A commission of 2.75 per cent including GST and a commission of 2.5 per cent plus GST are the same sum expressed two ways. Only the first may be written on a Queensland appointment.

The agency does not keep the $1,925. It collects the tax and accounts for it to the Australian Taxation Office in its own business activity statement. From the agency's point of view, its income from the sale is the $19,250.

Sellers of existing homes cannot claim it back

Whether GST on commission is a real cost depends on who is selling and what.

For the great majority of residential sellers it is. The Australian Taxation Office's guidance on residential premises, updated on 14 September 2026, explains that the sale of existing residential premises is input taxed. It summarises the consequence in a sentence: the seller cannot claim GST credits for anything purchased for the sale, and is not liable for GST on the sale.

Input taxed is a technical term with a plain meaning. No GST is charged on the price. In return, the seller gets no credit for the GST they pay on costs connected with the sale. The agent's commission is such a cost. So are the conveyancer's fees and the marketing.

The rule applies whether or not the seller happens to be registered for GST for some other purpose. A tradesperson registered for their business who sells the family home is making an input taxed sale and cannot run the agent's invoice through their business activity statement.

For this seller, the GST-inclusive commission is simply the cost. In the example, the seller is out of pocket by $21,175 and the split between fee and tax is of no practical consequence to them.

Sellers who may be able to claim

The position is different where the sale itself is taxable.

The tax office's guidance draws the line at new residential premises. A seller of new residential premises is liable for GST on the sale and can claim GST credits for related purchases. It treats a property as new if it has not previously been sold as residential premises, if it has been created through substantial renovations, or if it replaces a building that was demolished.

That category covers developers and builders selling newly built houses and apartments. For them the agent's commission is a business input like any other. The GST in it is claimed back as a credit, and the real cost of the commission is the pre-tax fee.

Sales of commercial property, vacant land and farms have their own GST rules, including concessions that can remove GST from the price. Those rules belong to a discussion of GST on property generally. For commission, the principle to carry away is the tax office's pairing: where the seller is liable for GST on the sale, credits are available for related purchases; where the sale is input taxed, they are not.

Which price the percentage is applied to

A percentage commission needs a base. On the sale of an existing home there is only one candidate, because the contract price contains no GST.

On the sale of new residential premises the price does include GST, and the question becomes real. A commission of a given percentage produces a different sum depending on whether it is applied to the price the buyer pays or to that price less the GST the seller must remit. On a new apartment sold for $660,000 including GST, for example, the price less one-eleventh is $600,000. A rate of 2.2 per cent yields $14,520 on the first figure and $13,200 on the second. These figures are illustrative.

Neither basis is prescribed. The Office of Fair Trading's requirement is that the appointment state the commission, and an appointment for a taxable sale needs to say which price the rate applies to. Developers and project marketers sometimes avoid the question altogether by agreeing a fixed sum per lot. In the District Court's 2024 decision in Podium Project Marketing Pty Ltd v B Global (Aust) Pty Ltd, the commission was $40,000 per lot plus GST under appointments for a 60-lot residential project.

That phrase, "plus GST", appears in the judgment as a description of what those parties agreed. Whatever the commercial shorthand, the regulator's guidance is that the commission on the appointment must include GST and say so.

Marketing and other expenses

Commission is not the only amount an agent bills. The Office of Fair Trading requires the appointment to list any other expenses, such as advertising and marketing, with their due dates. These carry GST too, and how they are treated depends on whose expenses they are.

The 2013 note explains the distinction. When an agent incurs costs such as advertising or repairs, it must be clear whether the expense is the agent's own or the principal's. The note records the tax office's acceptance that an expense belongs to the owner where the agent is reimbursed exactly, and not approximately, for what was spent, and the agency agreement confirms that the agent acts as the owner's representative in incurring it.

In practical terms there are two patterns. In the first, the agent buys the advertising as the seller's representative and passes on the exact cost. The GST in the advertiser's price is part of what the seller reimburses. In the second, the agent supplies a marketing package for a stated price as part of its own service, and that price includes GST like any other fee.

For a seller of an existing home the difference is academic, since no credit is available either way. The total payable is what matters, and it should match the schedule on the appointment. For a seller who can claim credits, the paperwork matters more, because a credit depends on holding a valid tax invoice for the supply.

Where the numbers appear at settlement

By settlement day the commission has usually been funded already. In a typical residential sale the buyer's deposit has been paid to the agent and held in the agent's trust account. The Queensland Government's guidance for sellers describes what happens next: at settlement the agent deducts the commission and forwards the balance of the deposit to the seller.

Three documents record the result, and GST appears in them differently.

The settlement statement prepared by the seller's conveyancer or solicitor is a fourth document with a different purpose. It adjusts the price between buyer and seller for rates and other outgoings and shows how the money due at settlement is to be paid. Where the deposit held by the agent is larger than the commission, the commission is dealt with on the agent's own statement and does not need to pass through the settlement figures. Where the deposit is smaller than the amounts owed to the agent, the shortfall is commonly paid from the settlement proceeds, and the agent's account then appears among the payments the conveyancer makes.

In every version, the figure a seller of an existing home should expect to see for commission is the GST-inclusive one. In the example, that is $21,175. A statement showing $19,250 with tax to follow, or $21,175 with tax on top, would not match the appointment.

The rental side

The same structure applies to an owner who pays a managing agent, and the tax office's guidance addresses it directly.

Rent from residential accommodation is input taxed. The owner does not charge GST on the rent. The guidance states that the owner also cannot claim credits for the GST included in costs relating to the rental, and gives the agent's commission and repairs and maintenance as examples.

A property manager's letting commission and commission on rent are therefore GST-inclusive costs to a residential landlord, in the same way that a selling agent's commission is to a home seller. Under the Office of Fair Trading's guidance, the rates on a management appointment are written inclusive of GST, so the percentage on the form is the percentage that will be deducted from the rent.

Checking the figure

The arithmetic of GST on commission is simple enough to check by hand, and the paperwork gives a seller everything needed to do it.

1. Take the commission rate or sum from the appointment. It is GST inclusive.
2. Apply the rate to the sale price in the contract to get the commission in dollars.
3. Divide the result by 11. That is the GST the agent's tax invoice should show.
4. Compare the invoice total with the amount deducted on the agent's statement of account.
5. Check marketing and other expenses against the schedule on the appointment in the same way.

If the numbers agree, the commission has been charged as agreed. If they do not, the appointment is the reference point, because under Queensland's rules it is the document that fixes the figure.

For agents, getting this right is part of ordinary good practice. A seller who is told one inclusive figure at the appraisal, sees the same figure on the form and finds it again on the final statement has no reason to query the fee. Most do not, because most statements match.

The home changes hands without GST. The service of selling it does not, and in Queensland that tax has to be inside the commission from the day the appointment is signed.

Kooky, from Shaka

Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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