ATO sharpens GST focus on real property in Top 1,000 Assurance Program

The Australian Taxation Office (ATO) has released its latest findings report on the Top 1,000 GST Assurance Program, providing valuable insight into the areas attracting increased scrutiny during goods and services tax (GST) assurance reviews.

The report highlights a continued focus on ensuring taxpayers are correctly reporting GST and maintaining effective tax governance frameworks, while also introducing a structured three-tier model used by the ATO to identify behaviours and transactions that may present GST risk, namely real property transactions and accommodation arrangements.

Key findings from the Top 1,000 GST Assurance Program

The ATO reported that between 1 July 2019 and 30 June 2026 it completed 1,034 GST reviews covering 860 taxpayers. As of 30 June 2026, 46% of taxpayers within the Top 1,000 population had achieved a high assurance rating, 49% achieved medium assurance, and 5% remained at low assurance. The ATO noted an encouraging trend of taxpayers improving their assurance ratings over time, with governance remaining one of the most significant barriers to achieving high assurance.

The report also emphasises the importance of GST governance, data integrity, and transaction testing. The ATO observed that taxpayers with well-designed and documented GST control frameworks are significantly more likely to achieve higher assurance outcomes.

The ATO’s three-tier model

A notable feature of this year’s report is the alignment of GST assurance activities with the ATO’s Public and Multinational Business Three-Tier Model (3TM). The model is designed to identify the key behaviours, events, and focus areas that drive tax performance and compliance outcomes.

Tier 3 identifies the specific transaction type and industries that the ATO considers warrant closer attention. The ATO’s current GST focus areas include:

• treatment of significant or unusual transactions involving financial supplies (e.g. financial acquisition threshold)
• treatment applied by financial services, investment, and insurance industries (e.g. GST apportionment, reduced input tax credits, reverse charge)
• the GST classification of food and health products
• reporting of GST on low value imported goods and inbound intangible supplies by offshore entities
• treatment applied to real property transactions and accommodation.

Real estate emerges as key focus area

Of particular interest is the ATO’s identification of real property transactions and accommodation arrangements as a specific Tier 3 focus area, with 15% of issues that received a separate assurance rating for this risk area in the 2025–26 financial year obtaining a low or red flag assurance rating. These issues particularly relate to the application of the margin scheme, GST-free farmland provisions, claiming of input tax credits in relation to the supply of residential accommodation, and GST treatment of build-to-rent (BTR) developments.

While the report does not introduce new GST rules for real property, its inclusion in the ATO’s formal risk framework is a clear signal that property transactions remain a significant area of concern from a GST assurance perspective. The GST outcomes of property transactions can be a complex technical issue and involve significant value.

Property funds, developers, and real estate investment groups may face increased scrutiny of matters such as land acquisitions and disposals, leasing arrangements, development structures, going concern concessions, margin scheme eligibility, and input tax credit entitlements. Given the volume, value, and complexity of transactions undertaken across the sector, the ATO is likely to continue closely examining the GST treatment adopted by property funds for both day-to-day operations and significant transactions.

BTR draft guidance may assist property funds

Against this backdrop, the ATO’s ongoing work on GST guidance for modern BTR developments may provide welcome clarity for the property sector.

The ATO is currently developing an addendum to GSTR 2012/6 dealing with commercial residential premises. The draft update was issued following recognition that modern BTR developments often have characteristics that differ from traditional residential accommodation and can involve complex questions regarding whether premises should be characterised as residential premises or commercial residential premises for GST purposes.

For more information, see our previous alert on draft ruling GSTR 2012/6DC, available here.

For property funds investing in the growing BTR sector, the finalised ruling is expected to provide greater certainty when structuring developments and assessing GST outcomes.

How SW can help

The ATO’s latest GST assurance findings reinforce that strong GST governance and accurate transaction reporting remain critical to achieving a high assurance rating. The inclusion of real property transactions and accommodation arrangements as a specific GST focus area highlights the ATO’s continued scrutiny of the property sector, particularly property funds, developers, and real estate groups.

The ATO’s draft guidance on BTR accommodation is a welcome development, providing greater certainty in an area that has historically presented GST issues. Property funds should carefully assess and document the GST treatment of their property transactions, particularly significant acquisitions, disposals, and development arrangements, to ensure they are well positioned for future ATO reviews.

SW’s indirect tax specialists have extensive experience advising on the GST treatment of property transactions and accommodation arrangements. If you would like to review the GST treatment adopted for your property activities, please contact your SW advisor.

Contributor

Dylan Kelly | Senior Consultant, Tax