Real estate agency bookkeeping sits at the intersection of AASB 15 revenue recognition, mandatory trust account regimes under state licensing legislation, and increasingly complex withholding obligations on high-value property sales. Agencies that both sell property and manage rentals carry two fundamentally different revenue streams — each with distinct GST treatment, timing rules, and reconciliation requirements.
Commission Revenue Recognition Under AASB 15
Sales commission earned by a real estate agent is recognised at a point in time under AASB 15 Revenue from Contracts with Customers, not over time. The performance obligation — facilitation of the property exchange — is satisfied at the moment contracts are unconditionally exchanged. This is the point at which the agent has done everything required to earn the commission, the buyer and seller are contractually bound, and the outcome is no longer reversible by either party without legal consequence.
This matters for period-end cut-off. Where exchange occurs in one month and settlement occurs in the following month, the commission is recognised at exchange — not at settlement. In practice, many agencies invoice at settlement because that is when the commission is physically released from trust, but the accounting entry for revenue accrual must be made at exchange date. Bookkeepers maintaining accrual-basis accounts need a contract register that tracks exchange dates separately from settlement dates.
Commission rebates or reductions offered post-exchange — for example, where a vendor complains and the agent reduces the commission — are adjustments to the original transaction price under AASB 15 paragraph 47 and should be recorded as a reduction to commission revenue in the period the adjustment is agreed.
GST on Commissions
Real estate agent commissions on residential and commercial property sales are taxable supplies under the GST Act. The agent's commission invoice to the vendor must include GST at 10%, and a valid tax invoice must be issued. The agent is entitled to an Input Tax Credit for any GST-inclusive expenses directly attributable to the supply of agency services.
One area that regularly produces BAS errors is the treatment of marketing costs recovered from vendors. Where an agency charges a vendor for advertising (e.g., portal listings, photography, copywriting) and recovers those amounts dollar-for-dollar or at a markup, the recovery is a separate taxable supply if the agent is acting as principal in acquiring those services. If the agent acts purely as agent — acquiring services on the vendor's behalf and passing through the cost — the recovery may be a reimbursement rather than a taxable supply. The distinction turns on whether the agent contracted with the third-party supplier in its own name or in the vendor's name. Most agencies contract in their own name, making the recovery taxable. Bookkeepers should confirm the agency's standard marketing engagement terms.
Trust Account Compliance by State
The holding of client funds — particularly vendor deposit funds and rental bond money — is governed by state-based licensing legislation. The key frameworks are:
- NSW: Property, Stock and Business Agents Act 2002 (PSBA Act) and the Property and Stock Agents Regulation 2022. Agents must maintain separate trust accounts for sales deposits and rental monies, with monthly reconciliation to the trust ledger and annual audit by an approved auditor under s.105.
- VIC: Estate Agents Act 1980 and Estate Agents (General, Accounts and Audit) Regulations 2018. Section 64 requires trust money to be paid into a trust account on the day of receipt (or next banking day).
- QLD: Property Occupations Act 2014 and the Property Occupations Regulation 2014. Trust account reconciliation is required monthly, and the annual trust account audit must be lodged with the Office of Fair Trading.
- WA: Real Estate and Business Agents Act 1978 and the associated general regulations.
- SA: Land Agents Act 1994.
For bookkeepers, the practical obligation is to maintain a trust account ledger that records every receipt, disbursement, and running balance for each individual client matter. The trust ledger must reconcile to the trust bank statement on a monthly basis. Any discrepancy — even a timing difference — must be investigated and documented. The trust account bookkeeping function is entirely separate from the agency's own operating accounts.
Foreign Resident Capital Gains Withholding
Since 1 July 2017, purchasers of Australian real property with a market value of $750,000 or more are required to withhold 12.5% of the purchase price and remit it to the ATO under the Foreign Resident Capital Gains Withholding (FRCGW) regime, unless the vendor provides a clearance certificate from the ATO confirming they are an Australian resident.
Real estate agents are not themselves liable as the withholding agent — the obligation falls on the purchaser. However, real estate agents play a critical role in facilitating clearance certificates and ensuring that settlement agents are aware of the withholding obligation. From a bookkeeping perspective, the net amount received by the vendor (after withholding) will differ from the stated purchase price. This affects the trust accounting at settlement: the trust account will show a receipt from the purchaser of 87.5% of the purchase price, with the 12.5% remitted directly to the ATO by the purchaser or settlement agent. The commission calculation must be made on the full gross purchase price, not the net.
Rental Ledger Reconciliation
Property management generates a recurring reconciliation challenge: the rental trust account receives tenant payments, disburses property management fees (commission), repairs and maintenance charges, council rates, and other outgoings, and remits the net balance to the property owner. Each property owner has a separate trust ledger account, and each must be reconciled individually.
The property management fee — typically expressed as a percentage of rent collected — is a taxable supply. The fee is recognised as revenue when the management service is delivered (monthly). Owner disbursements are not revenue; they are trust account pass-throughs.
A common error is coding repairs invoices paid from the trust account as expenses of the agency. Those costs belong to the property owner's ledger — they are disbursements from trust, not expenses of the agency. Only expenses directly incurred by the agency in its own right (staffing, software, advertising) flow through the agency's P&L.
Reconlink for Real Estate Agency Bookkeeping
Reconlink imports the agency's operating-account statements (CSV, Excel or PDF upload, or a per-client email inbox), enabling fast classification of commission income, marketing recoveries, and management fees. Coding rules can be configured to distinguish trust account pass-throughs from operating revenue, preventing contamination of the agency's P&L with client funds. The BAS export maps commission income and GST collected directly to the G1 and 1A fields of the BAS worksheet, and the audit trail provides the documented reconciliation record required by state licensing auditors when they review the annual trust account audit.