Chattels vs Fixtures in Australian Property Development: GST, Pricing & Legal Guide

Property developers in Australia may face GST implications of $40,000 to $100,000 or more per apartment development depending on how they classify and treat chattels versus fixtures. While this distinction might appear purely academic at first glance, the financial, legal, and operational consequences could directly impact project feasibility, settlement cash flow, and buyer relationships. In a typical 50-unit apartment building, chattels may represent $250,000 to $750,000 in costs—roughly 2-6% of total development expenditure—yet remarkably little integrated guidance exists for developers navigating these decisions.

This guide examines what developers may need to know about chattels and fixtures across Australian property development, from legal classification frameworks through to GST optimisation strategies, contract drafting, and investor marketing approaches. Whether you’re specifying appliances for your first apartment project or managing bulk procurement across multiple developments, understanding how chattels and fixtures work together could mean the difference between smooth settlements and costly disputes, between optimised tax positions and missed opportunities.

Understanding Chattels and Fixtures Under Australian Law

The distinction between chattels and fixtures in Australian property law is generally understood to rest on well-established common law principles, refined through more than a century of case law. At its most basic level, a chattel may be defined as personal property that can be removed from land without causing damage, whilst a fixture is typically understood as an item that has become part of the land itself through attachment or integration.

This distinction matters because fixtures are generally considered to transfer automatically with property sales unless specifically excluded in contracts, whilst chattels typically remain the seller’s property unless explicitly included. For developers, this framework affects what buyers expect to receive, what must be disclosed in contracts, and crucially, how GST applies to different components of the sale price.

The Two-Stage Legal Test

Australian courts generally apply a two-stage test derived from the landmark English case Holland v Hodgson (1872), which examines both the degree of annexation and the object or purpose of annexation. However, the modern Australian approach, as established in Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700, tends to emphasise the object test as the primary consideration.

In the Coroneo case, theatre seats that were bolted to the floor were held to be chattels rather than fixtures, despite their firm physical attachment. Jordan CJ’s reasoning focused on the objective intention—the seats were installed to enable the temporary business operation of a theatre, not to make a permanent improvement to the land itself. This principle may be particularly relevant for developers when considering items like high-end appliances or designer light fittings.

Recent case law continues to refine these principles. Conexa Sydney Holdings Pty Ltd v Chief Commissioner of State Revenue [2025] NSWCA 20 represents the most recent NSW Court of Appeal decision from this year, determining that water pipelines constituted fixtures (classified as land) for Duties Act purposes even when owned separately from surrounding land. This clarifies treatment in complex property transactions with direct implications for developers working on projects involving significant infrastructure.

Practical Application: The Degree of Annexation

The first part of the test examines how firmly an item is attached to the property. Items that may typically be considered fixtures based on degree of annexation include:

• Built-in ovens and cooktops when integrated into cabinetry
• Fixed floor coverings including carpets that are affixed down
• Built-in wardrobes and cabinetry
• Ceiling fans and fixed light fittings
• Bathroom fixtures (toilets, basins, baths, showers)
• Air conditioning units when connected by pipes or hardwired
• Solar panels and associated mounting systems

Conversely, items that generally remain chattels despite some connection might include:

• Freestanding appliances (refrigerators, washing machines, dryers, microwaves)
• Furniture, even if custom-fitted to a space
• Curtain fabric (though curtain rails may be fixtures)
• Portable air conditioners
• The television itself in wall-mounted setups (though the bracket may be a fixture)

Practical Application: The Object or Purpose Test

Modern Australian courts tend to prioritise the object test, which examines why an item was attached. Chief Commissioner of State Revenue v Shell Energy Operations 2 Pty Ltd [2023] NSWCA 113 provides recent 2023 guidance from the NSW Court of Appeal, emphasising both the intention of parties and the degree of annexation when applying traditional tests.

The critical question is generally understood to be: was the item attached to improve the land permanently, or was it attached for the better enjoyment of the item itself? For apartment developers, this distinction could matter significantly when specifying:

• Kitchen appliances: A built-in dishwasher integrated into cabinetry may be considered a fixture intended to complete the kitchen design, whilst a freestanding dishwasher under the counter might be viewed as a chattel for the tenant’s convenience
• Light fittings: Basic residential light fittings are typically fixtures, but expensive designer chandeliers might be chattels if the evidence suggests they were installed for the owner’s personal enjoyment rather than to improve the property
• Window coverings: Curtain rails and tracks are generally fixtures forming part of the window design, whilst curtains and drapes themselves are typically chattels

The Grey Areas Requiring Explicit Contractual Specification

Between clear fixtures and obvious chattels lies a substantial grey area where classification could go either way depending on specific circumstances. For developers creating standard contracts across multiple units, these ambiguous items require careful contractual specification to avoid disputes.

Dishwashers

Dishwasher classification may depend heavily on installation type. A fully integrated dishwasher with custom cabinetry panels matching the kitchen is more likely to be considered a fixture, forming part of the permanent kitchen design. A freestanding dishwasher placed under the counter might be argued either way. For developers specifying dishwashers across 50 apartments, the safest approach could be explicit listing in contracts regardless of installation type.

Light Fittings

Whilst basic light fittings are generally understood as fixtures, expensive or designer light fittings might be treated as chattels, particularly if they could be removed without damage and replaced with standard fittings. In practice, disputes often arise when sellers remove expensive pendant lights or chandeliers and replace them with cheap alternatives before settlement. Developers might consider photographing all light fittings during marketing and explicitly listing any to be excluded from the sale.

Wall-Mounted Items

Mirrors present particular challenges. Frameless mirrors attached directly to walls with adhesive are typically fixtures, as their removal would likely damage the wall. Framed decorative mirrors hung on brackets might be chattels. Similarly, wall-mounted televisions create confusion—the mounting bracket is generally a fixture, but the television itself typically remains a chattel unless specifically included.

Air Conditioning

Ducted air conditioning systems and split systems with external compressor units are generally considered fixtures due to their integration with the building structure. Portable air conditioning units are clearly chattels. Window-mounted units might fall into the grey area depending on installation permanence.

Garden and Outdoor Items

For developments including gardens or outdoor spaces, classification could affect items such as:

• Built-in BBQs: Generally fixtures when connected to gas lines and built into masonry or cabinetry
• Water features: Typically fixtures if permanently installed and connected to plumbing
• Garden sculptures and statues: May be chattels unless forming part of a designed landscape feature
• Removable planters and pots: Generally chattels even if quite large
• Outdoor furniture: Typically chattels unless custom-built into the structure

GST Treatment: Why Chattels Cost Developers Tens of Thousands

The chattel-fixture distinction carries profound GST implications because the margin scheme applies exclusively to real property—chattels cannot be included in margin scheme calculations. This creates mandatory apportionment requirements under the Australian Taxation Office’s primary guidance document, GSTA TPP 013 (14 June 2005), which establishes that new residential premises sold with chattels constitute separate supplies requiring distinct GST treatment.

Understanding the Margin Scheme Advantage

The margin scheme can reduce GST liability by 40-70% compared to standard GST calculations, but this benefit applies only to the real property component. Consider a straightforward example:

Standard GST calculation on $600,000 sale:

• Sale price: $600,000
• GST component: $54,545 (being 1/11th of sale price)
• Net to developer: $545,455

Margin scheme calculation (with $300,000 original land cost):

• Sale price: $600,000
• Margin: $300,000 ($600,000 less $300,000 land cost)
• GST on margin: $27,273 (being 1/11th of $300,000 margin)
• Net to developer: $572,727

The margin scheme saves approximately $27,000 in this scenario—a 50% reduction in GST liability. However, this saving applies only to real property, creating significant financial implications when chattels are involved.

The Critical Apportionment Requirement

Property developers must apportion the sale price between real property and chattels when using the margin scheme. The ATO’s position is clear: chattels attract GST on the full sale price, not on any margin.

Consider a typical apartment development scenario:

$600,000 apartment sale including $20,000 furniture package, with $300,000 original land cost:

Without proper apportionment (incorrect approach):

• Applying margin scheme to full $600,000 creates calculation errors

With proper apportionment (correct approach):

• Real property component: $580,000
• Margin on real property: $280,000 ($580,000 less $300,000)
• GST on real property: $25,455 (1/11th of $280,000 margin)
• Chattel component: $20,000
• GST on chattels: $1,818 (1/11th of full $20,000 price)
• Total GST: $27,273

The critical difference: chattels attract GST on the full sale price, eliminating the 40-70% savings the margin scheme provides for that component. On a major development, failing to properly separate chattels could mean paying substantially more GST than necessary if you under-declare the chattel component, or facing ATO penalties if you improperly include chattels in margin scheme calculations.

The 2018 Withholding Regime and Cash Flow Impacts

The current GST withholding system compounds the importance of proper chattel treatment. Since July 2018, purchasers must withhold GST and pay directly to the ATO at settlement—approximately 7% of the contract price for margin scheme properties, or the standard rate of 1/11th (roughly 9.09%) for full GST treatment.

Previously, developers collected GST at settlement and remitted to the ATO with Business Activity Statement filings up to three months later, providing working capital. The current system requires immediate withholding, affecting settlement cash flow. On a $2 million sale with $100,000 in chattels, properly identifying and breaking down the chattel component could affect settlement cash flow by $2,000 to $10,000 depending on withholding calculations.

Time Limits for Input Tax Credits

MT 2024/1, finalised in December 2024, imposes strict four-year time limits for claiming input tax credits from Business Activity Statement due dates. The ruling provides no discretion to extend these time limits, and critically, amendment requests and private rulings do not preserve entitlement—only valid objections filed within four years maintain credit rights.

This directly impacts developers who delay claiming credits on chattel purchases. If you acquire $100,000 in chattels with $9,091 in GST credits available, but fail to claim within four years of the relevant BAS due date, those credits may be permanently lost. The urgency around proper documentation and timely filing cannot be overstated.

Common GST Mistakes to Avoid

Specialist property tax advisors identify several recurring errors that could cost developers substantially:

1. Charging GST on pre-existing residential property with chattels: Existing residential property is input-taxed (GST-free), yet developers frequently charge GST anyway when selling with chattels included, then compound the error by claiming credits on expenses

2. Missing the written margin scheme agreement: The margin scheme requires a written agreement between vendor and purchaser. On major developments, missing this documentation could cost $50,000 to $100,000 or more in forced full GST liability instead of margin calculations

3. Failing to separately identify chattels in contracts: Without clear contractual separation, the ATO may challenge your apportionment methodology, particularly if the chattel value appears unreasonably high or low

4. Treating all appliances as fixtures: Developers sometimes incorrectly assume that all kitchen appliances become fixtures once installed, applying margin scheme treatment to the full sale price including substantial appliance costs

Professional tax advice in this area could pay for itself many times over, given the high-stakes compliance requirements and the substantial sums involved.

Apartment Development Context: What to Include in Sale Prices

For developers creating apartments for sale, the chattel question typically arises during the specification phase: what appliances and fittings should we include, and how does this affect our pricing strategy, GST position, and buyer expectations?

Standard Inclusions by Apartment Class

Based on typical Australian apartment developments, chattel costs may vary substantially by building class:

Budget/Entry-Level Apartments ($3,000-$5,000 chattels per unit):

• Basic refrigerator (200-250L)
• Electric cooktop (4 burners)
• Basic rangehood
• Standard dishwasher
• Basic window coverings (roller blinds)
• Standard light fixtures throughout

Mid-Range Apartments ($5,000-$10,000 per unit):

• Quality refrigerator (300-400L)
• Gas or induction cooktop
• Upgraded rangehood with improved extraction
• Integrated dishwasher
• Quality blinds or shutters throughout
• Contemporary light fixtures
• Microwave (may be included)
• Basic washing machine provisions or included unit

Luxury/Premium Apartments ($15,000-$30,000+ per unit):

• Premium appliances (Sub-Zero refrigerator, Miele dishwasher, etc.)
• High-end cooktop and oven combination
• Designer/architectural lighting throughout
• Motorised window coverings
• Wine refrigerator
• Built-in coffee machine
• Washer and dryer in-unit
• Smart home integration systems
• Premium bathroom fittings and fixtures

These ranges are indicative only and could vary substantially based on project positioning, target market, and competitive landscape. For a 50-unit development at mid-range specification, you might anticipate $250,000 to $500,000 in total chattel costs across the project.

Financial Modelling Implications

Chattels represent a meaningful component of total development costs, typically 2-6% of the overall budget, yet they’re often underspecified in early feasibility analysis. When modelling your development, consider:

Direct costs: Purchase price of appliances and fittings, delivery and installation, warranty provisions, storage costs for bulk orders, and wastage/damage allowances (typically 2-5% on large projects)

GST treatment: Input tax credits on chattel purchases (claimable in full), GST on chattel component of sales (charged on full price, not margin), and net GST cash flow timing

Financing implications: Chattels may attract different interest rates than construction costs, bulk ordering might enable progress payments rather than full upfront cost, and some lenders treat chattels separately in valuation assessments

Buyer financing: Chattel components might not be valued as highly as built-in fixtures by purchaser lenders, potentially affecting buyer borrowing capacity on properties with substantial chattel content

With Feasly’s feasibility software, you can model different chattel specification scenarios and their impact on unit pricing, GST liability, and overall project returns, helping you optimise the balance between included fittings and target margins.

Procurement and Installation Timing

For developments involving dozens of apartments, procurement logistics become critical. A typical timeline might include:

12-18 months before completion: Specify appliances in contracts, obtain bulk pricing quotes from multiple suppliers, identify primary and backup suppliers for each item, and confirm lead times

6-12 months before completion: Place bulk orders with confirmed models and delivery dates, confirm colours and finishes with buyers if offering customisation, arrange secure storage, and lock in pricing against market fluctuations

3-6 months before completion: Receive and warehouse appliances, conduct quality inspections on sample items, verify serial numbers match orders, and prepare installation scheduling

1-3 months before completion: Install in sequence as units reach practical completion, verify installations meet specifications, document serial numbers for warranty purposes, and test all appliances

Settlement week: Final verification inspections, prepare handover documentation with warranty cards and manuals, confirm chattels match contracted specifications, and address any last-minute issues

State-by-State Legal Variations

Whilst the fundamental legal framework is substantially uniform across Australia—all jurisdictions apply the same Holland v Hodgson two-stage test—some important variations exist in judicial interpretation and statutory provisions.

NSW vs Victoria: The Judicial Interpretation Divergence

A significant divergence in judicial interpretation emerged from two 2020-2021 Supreme Court cases involving nearly identical wind farm assets. These contrasting decisions demonstrate how state courts may weight common law factors differently.

In AWF Prop Co 2 Pty Ltd v Ararat Rural City Council [2020] VSC 853, the Victorian Supreme Court held wind turbines were chattels, emphasising what it called the “modern approach” that prioritises object/intention of annexation. The court gave determinative weight to lease terms requiring removal and planning permits requiring decommissioning.

By contrast, SPIC Pacific Hydro Pty Ltd v Chief Commissioner of State Revenue [2021] NSWSC 395 saw the NSW Supreme Court hold nearly identical assets were fixtures, adopting what critics called a more “traditional” or “strict” interpretation emphasising physical attachment. The NSW court disagreed with Victoria’s approach of giving determinative weight to contractual and regulatory obligations.

Commercial implications: In NSW, assets classified as fixtures become “real property” triggering landholder duty liability and making them taxable Australian property for foreign resident capital gains tax purposes. In Victoria, the same assets classified as chattels might avoid these taxes entirely. For large apartment developments with substantial common property assets, this divergence could represent hundreds of thousands of dollars in tax implications.

Queensland Statutory Provisions

Queensland’s Property Law Act 1974 Section 155 gives agricultural tenants two months after lease expiry to remove fixtures, more generous than common law’s “reasonable time” standard. Whilst primarily relevant to agricultural contexts, this provision demonstrates Queensland’s legislative willingness to modify common law principles, which could influence judicial interpretation in marginal cases.

Victorian Statutory Protections

Victoria’s Property Law Act 1958 Section 154A provides specific statutory provisions to exclude tenant’s fixtures from land valuation for rating purposes, creating an additional protection pathway beyond common law. This may be particularly relevant for developers purchasing properties with existing improvements or fixtures that might otherwise inflate land valuations.

NSW Conveyancing Requirements

NSW’s Conveyancing Act 1919 and associated regulations impose specific disclosure requirements for chattels and fixtures in contracts. NSW developers should ensure contracts clearly specify all chattels included and any fixtures excluded, with photographic evidence where practical.

GST Treatment: No State Variations

Importantly, GST treatment is federally uniform with no state variations. The ATO’s guidance documents—including GSTA TPP 013, GSTR 2001/8, and ATO ID 2004/401—apply consistently across all Australian states and territories. The margin scheme eligibility criteria, input tax credit rules, and withholding regime requirements show no jurisdictional differences.

For practical purposes, small to mid-sized apartment developers face minimal state variation in day-to-day operations. The common law tests, contractual specification requirements, and GST treatment remain functionally identical across major development markets (NSW, VIC, QLD). The NSW vs Victoria judicial divergence represents meaningful commercial risk primarily for large-scale developments involving substantial assets that could be characterised either way.

Pricing Strategy: How Chattels Affect Sale Prices and Margins

The chattel-fixture decision directly impacts pricing strategy, buyer perception, and ultimately project returns. Developers face a strategic choice: include generous chattels to create “turn-key” appeal and potentially command premium pricing, or minimise inclusions to maximise margins and transfer chattel costs to buyers.

The Depreciation Advantage for Investors

One of the most compelling reasons to separately identify and potentially enhance chattel inclusions relates to depreciation benefits for investor-buyers. Chattels depreciate over 5-7 years under Australian taxation law, compared to 27.5-40 years for building structures. This accelerated depreciation creates substantial tax benefits.

Consider a practical example: an investment property purchased for $500,000 might have $25,000 in identifiable chattels. That $25,000 depreciates much faster than the building structure, potentially generating $3,500 to $5,000 in additional first-year depreciation deductions depending on the investor’s marginal tax rate.

For developers targeting the investor market, this depreciation advantage becomes a marketing tool. By providing detailed schedules separating chattels from fixtures, you may enhance the property’s tax effectiveness for investors, potentially justifying higher sale prices or accelerating sales velocity.

Premium Appliances as Competitive Differentiator

In competitive markets, the quality and brand recognition of included chattels could influence buyer decisions. Two otherwise identical apartments might command different prices based solely on appliance specifications:

Standard specification apartment: Basic unknown-brand appliances, minimal chattels, buyers expect to upgrade after purchase. This approach maximises margin but may reduce appeal to time-poor buyers or investors seeking immediate rental income.

Premium specification apartment: Recognisable brands (Miele, Smeg, Sub-Zero), comprehensive inclusions, true “turn-key” appeal. This approach reduces margin per unit but might command 2-5% price premiums and accelerate sales, improving project IRR through faster capital recycling.

The optimal strategy may depend on your target market, competitive positioning, and project timeline pressures.

Bulk Procurement Efficiencies

Developers ordering appliances for 50+ apartments can potentially negotiate substantial discounts compared to retail pricing—often 30-40% below recommended retail prices. This creates interesting strategic options:

Option 1: Capture the margin: Specify mid-range appliances, negotiate bulk discounts, include them in sale price, and capture the procurement margin as part of project returns

Option 2: Pass through the savings: Use bulk discounts to include higher-specification appliances at the same cost, differentiating your project without reducing margins

Option 3: Offer upgrades: Include basic appliances in base price, offer premium upgrade packages at cost-plus pricing, giving buyers choice whilst potentially improving margins on upgrade selections

Contract Transparency and Buyer Confidence

Regardless of your strategic approach, clear contractual specification builds buyer confidence. Consider including:

• Specific make and model numbers for all major appliances
• Clear photographs of installed chattels taken during marketing phase
• Warranty details and duration for each chattel item
• Substitution clauses if specified models become unavailable
• Explicit lists of what’s included (chattels) and what’s excluded (fixtures being removed)

This transparency could reduce disputes, speed up settlements, and build reputation for future projects.

Common Disputes and How to Prevent Them

Despite clear legal principles, chattel-fixture disputes remain common in Australian property transactions. For developers, systematic dispute prevention costs far less than dispute resolution.

The “Switcheroo” Problem

One of the most frequent disputes involves sellers (or in development contexts, display suite fittings versus actual apartments) substituting chattels between contract and settlement. Common scenarios include:

• High-end appliances in display suite, basic appliances in actual units: Buyers touring a display apartment may reasonably expect equivalent specifications
• Designer light fittings removed before settlement: Expensive pendant lights or chandeliers replaced with cheap alternatives
• Upgraded chattels during marketing downgraded before completion: Early marketing materials showing premium appliances, but contracts specify standard items

Prevention strategies: Photograph all chattels in situ during marketing phase, attach photographs to contracts as schedules, specify exact make and model numbers in contracts, grant buyers pre-settlement inspection rights to verify chattels match specifications, and maintain clear communication about any substitutions required due to supply issues.

Ambiguous Contract Language

Vague contract terms create unnecessary disputes. Problematic examples include:

• “All kitchen appliances” without specifying what qualifies as kitchen appliances
• “Standard fittings throughout” without defining what “standard” means
• “As per display suite” without accounting for inevitable differences in multi-unit projects

Better practice: List every chattel individually with make and model numbers, separately list any fixtures being excluded, use photographs or specification sheets as contract schedules, and define any potentially ambiguous terms used.

Bulk Inconsistencies Across Units

In developments with dozens of similar apartments, buyers inevitably compare notes. If Apartment 301 includes a premium refrigerator whilst identical Apartment 401 includes a basic model, disputes may arise even if both contracts were technically fulfilled.

Prevention strategies: Standardise chattel specifications across all units in the same apartment type, maintain detailed specification documents showing what each apartment type includes, document any legitimate variations (corner units, penthouses, etc.) in writing, and ensure sales teams communicate consistently about inclusions.

Pre-Settlement Damage or Removal

Between practical completion and settlement, chattels could be damaged, removed, or replaced. This creates particular challenges for developers managing multiple settlements across weeks or months.

Protection mechanisms: Conduct pre-settlement inspections with buyers or their representatives, photograph all chattels at practical completion with date stamps, use serial number tracking for valuable items, maintain secure site access until all settlements complete, and have contingency plans for addressing any damage discovered.

Warranty and Defect Responsibilities

Disputes may arise about who is responsible when chattels malfunction shortly after settlement. Is it a manufacturer warranty issue, a builder defect, or an installation problem?

Clarity mechanisms: Provide comprehensive warranty documentation at settlement, clearly specify warranty periods and contact details for claims, assign manufacturer warranties to purchasers where possible, consider extended warranty offerings for major appliances, and maintain records of installation contractors for defect liability purposes.

Practical Contract Clauses for Multi-Unit Developments

Standard residential contracts may not adequately address the complexities of apartment developments involving substantial chattels across multiple units. Consider these provisions:

Chattel Specification Clause

“The purchase price includes the following chattels in the condition existing at the date of this contract, which chattels shall be at the Purchaser’s risk from the date of this contract:

1. Kitchen: [Specify exact make and model]

   • Refrigerator: [Brand] [Model] [Size]
   • Dishwasher: [Brand] [Model]
   • Cooktop: [Brand] [Model] [Fuel type]
   • Rangehood: [Brand] [Model]

2. Laundry: [Specify exact make and model]

   • Washing machine: [Brand] [Model]

3. Window Coverings: [Specify type and locations]

   • All windows: [Type] [Colour]

4. Light Fittings: [Specify by room or ‘as installed’]

The Vendor shall ensure all listed chattels are present and in working order at settlement.”

Substitution Rights Clause

“The Vendor reserves the right to substitute any chattel listed in this contract with an alternative of equivalent or superior quality, specification, and condition if the specified model becomes unavailable due to supply chain issues, product discontinuation, or manufacturer recall.

Any substituted chattel shall be: (a) Of equivalent or greater retail value (b) From a brand of comparable or superior market reputation (c) With equivalent or superior features and energy ratings (d) Confirmed in writing to the Purchaser minimum 30 days prior to settlement

If the Purchaser reasonably objects to a proposed substitution within 7 days of notification, the Vendor shall propose an alternative substitution or reduce the purchase price by the retail value difference.”

GST and Margin Scheme Clause

“The Vendor and Purchaser agree that:

(a) The Property constitutes ‘new residential premises’ for GST purposes (b) The Vendor and Purchaser elect to apply the margin scheme to the sale (c) The purchase price is apportioned as follows: - Real property (margin scheme applies): $[amount] - Chattels (full GST applies): $[amount] (d) The Purchaser shall withhold and remit GST in accordance with the withholding requirements

This clause constitutes the written agreement required for margin scheme application.”

Pre-Settlement Inspection Clause

“The Purchaser may conduct a pre-settlement inspection within [7] days prior to the settlement date for the purpose of verifying:

(a) All contracted chattels are present and installed (b) All chattels match the specifications in this contract (c) All chattels are in working order (d) No fixtures listed to remain have been removed

If the inspection reveals any discrepancy, the Purchaser shall notify the Vendor in writing within [2] business days, and the Vendor shall rectify the discrepancy prior to settlement or adjust the purchase price by mutual agreement.”

Warranty Assignment Clause

“The Vendor shall assign to the Purchaser all manufacturer warranties applicable to chattels included in this sale, and shall provide at settlement:

(a) All original warranty cards or certificates (b) All original purchase receipts showing warranty commencement dates (c) All instruction manuals and technical documentation (d) Contact details for warranty claims and service

The Vendor makes no additional warranties beyond the manufacturer warranties and any statutory consumer guarantees.”

Integration with Development Feasibility Analysis

Chattel decisions affect multiple feasibility metrics, and early-stage consideration could improve project returns.

Pro Forma Modelling

When building your development feasibility model, chattel costs should be broken out separately to enable scenario analysis:

Base case scenario: Minimum viable chattels meeting target market expectations Enhanced case scenario: Premium chattels as competitive differentiator Investor-optimised scenario: Strategic chattel selection maximising depreciation benefits

Feasly’s software enables you to model these scenarios side-by-side, comparing the impact on sales pricing, GST position, buyer appeal, and overall project IRR.

Cost Escalation Risk

Appliance costs can fluctuate significantly due to exchange rate movements, shipping costs, and supply chain disruptions. For projects with 12-18 month timelines between contracting and delivery, consider:

• Locking in prices with suppliers through forward contracts
• Including escalation clauses in buyer contracts if early-stage sales
• Factoring cost contingencies of 5-10% into feasibility models
• Diversifying supplier relationships to maintain competitive tension

Financing Considerations

Some project lenders treat chattels separately in their valuation assessments, potentially affecting loan-to-value ratios. If your development relies on substantial chattel inclusions to achieve target pricing, verify that your lender’s valuation methodology will recognise the full value. Alternatively, consider structuring financing to explicitly include chattel costs in construction facilities.

Investor Marketing: Turning Chattels into Selling Points

For developments targeting investor-buyers—which may comprise 30-60% of apartment purchasers in some markets—the depreciation advantage of chattels becomes a legitimate marketing angle.

Depreciation Schedules as Sales Tools

Consider commissioning quantity surveyor reports that separately identify chattel components and their depreciation treatment. These reports could be provided to prospective investor-buyers as part of your sales process, demonstrating the tax-effectiveness of your apartments.

A well-prepared depreciation schedule might show:

• Total claimable depreciation in Year 1: $[amount]
• Of which, chattel depreciation: $[amount]
• Estimated cumulative depreciation over 5 years: $[amount]
• Tax savings for investor on marginal tax rate of [X]%: $[amount]

This tangible financial benefit could justify premium pricing or accelerate sales.

Quality as Investor Protection

From an investor perspective, quality chattels could reduce maintenance headaches and tenant turnover. Marketing that emphasises “premium appliances reducing maintenance costs” or “brand-name appliances tenants prefer” may resonate with investors who view properties as business assets rather than homes.

Warranty Transfer Value

For investor-buyers, transferable appliance warranties have genuine value. Five-year warranties on major appliances reduce the investor’s maintenance exposure during the critical early ownership period. This could be explicitly valued in marketing materials.

Key Takeaways for Developers

Understanding chattels and fixtures in Australian property development requires balancing legal frameworks, GST optimisation, operational efficiency, and buyer expectations. Key principles to remember:

1. The legal distinction matters: Fixtures transfer automatically, chattels don’t. Contractual specification prevents disputes.

2. GST treatment is different: Margin scheme applies only to real property. Chattels attract GST on full price, potentially costing $40,000-$100,000+ if mishandled.

3. Classification follows the two-stage test: Degree of annexation and object/purpose, with modern courts emphasising purpose.

4. State variations are modest: NSW and Victoria’s judicial approaches differ on marginal cases, but core principles are uniform.

5. Grey areas require contracts: Dishwashers, light fittings, mirrors, and air conditioning should be explicitly specified rather than assumed.

6. Bulk procurement creates opportunities: Negotiate 30-40% discounts, then decide whether to capture margin, upgrade specifications, or offer choices.

7. Depreciation benefits attract investors: Chattels depreciate over 5-7 years, creating tax advantages worth marketing.

8. Documentation prevents disputes: Photographs, serial numbers, clear specifications, and pre-settlement inspections reduce conflict.

9. Professional advice pays for itself: GST mistakes can cost tens of thousands; proper structuring creates opportunities.

10. Integrate early in feasibility: Chattel decisions affect pricing, margins, GST, financing, and marketing—model them explicitly.

For developers navigating the complexity of chattels and fixtures across Australian property development, the financial stakes justify careful attention to classification, contractual drafting, GST treatment, and operational systems. Whether you’re specifying your first apartment project or managing your fiftieth development, understanding these principles could mean the difference between optimal project returns and costly oversights.