Turnover rent clause: base rent plus a share of sales

Sample clause

Written for a shopping centre lease between a fictional centre owner in Fremantle and Northbank Homewares, a fictional homewares retailer.

Turnover Rent. (a) In addition to the Base Rent of $64,000 a year, the Tenant must pay Turnover Rent equal to 8% of Gross Sales in each Lease Year above $800,000. (b) Gross Sales means the total price of goods and services sold from the Premises, and of orders placed at the Premises for later delivery, less GST, refunds actually given and staff discounts, but does not include online sales placed elsewhere and collected at the Premises. (c) Within 14 days after each month, the Tenant must give the Landlord a statement of Gross Sales for the month, and within 60 days after each Lease Year, a statement for the year certified by a registered auditor. (d) The Landlord may, once a Lease Year and on 10 business days' notice, have the Tenant's sales records inspected by its auditor. If Gross Sales are understated by more than 2%, the Tenant must pay the inspection cost. (e) The Landlord must keep the Tenant's sales information confidential, except as required by law.

Sample wording, not legal advice.

Variants

What to negotiate

• What counts as turnover

  The definition is where money moves. Tenants want GST, refunds, staff discounts, gift card sales until redeemed and online sales excluded. Landlords want sales made from the premises, including orders placed in store for delivery, included. Click and collect is the frequent battleground. Spell out each category, because a general phrase like all sales made from the premises will be argued both ways.

• Audit rights

  A landlord can only rely on turnover rent if it can check the figures. The tenant should provide monthly statements and an annual certified statement, and the landlord should have a right to inspect records, limited to once a year and on notice. A cost shifting rule, where the tenant pays for the audit if sales were understated beyond a small margin, discourages under reporting.

• Confidentiality

  Sales figures are commercially sensitive, and a tenant does not want them shared with competing tenants or future landlords. The clause should require the landlord to keep them confidential, with limited exceptions such as disclosure to financiers or a buyer of the centre under confidentiality obligations. Some state retail leases laws also restrict how a landlord may use or disclose turnover information.

The risk of leaving it out

Without a turnover rent clause, rent is fixed regardless of trading, which gives the landlord certainty but no upside, and leaves the tenant paying the same rent in a poor year. For centres that depend on the mix and success of their tenants, turnover rent aligns interests, and its absence can make a landlord less willing to support a struggling tenant.

A worked rent table

Using the sample's base rent of $64,000 and 8% of gross sales above $800,000: at sales of $700,000, the turnover rent is nil and total rent is $64,000. At $1,000,000, turnover rent is 8% of $200,000, which is $16,000, and total rent is $80,000. At $1,300,000, turnover rent is 8% of $500,000, which is $40,000, and total rent is $104,000. The threshold is often set near the sales at which the base rent alone would be a market rent, so the turnover component only applies to above average trading. Law checked on 21 October 2026. This page explains how the clause works and is not legal advice.

Definition checklist

A turnover definition should say whether it includes or excludes: GST and other taxes; refunds and exchanges; staff and loyalty discounts; gift cards when sold or when redeemed; layby and deposits; online orders delivered from the premises; online orders collected at the premises; sales by concessions or sublicensees operating in the premises; delivery charges; and sales of fixtures or assets. Each answer moves rent, so decide them before the lease is signed rather than at the first audit.

Retail leases laws

Retail leases in Australia are governed by state laws, such as Victoria's Retail Leases Act 2003, which regulate how leases are disclosed and how disputes are resolved, and in some states how a landlord may use turnover information or include online sales. Small business commissioners, including the Victorian Small Business Commission, help with disputes about turnover rent statements and audits.

Using turnover rent with a radius clause

Landlords that rely on turnover rent often add a radius clause, so a tenant cannot open a nearby store that draws sales away from the centre. A softer alternative is a turnover inclusion, where sales from a nearby store count towards the centre store's turnover. Tenants negotiating turnover rent should consider both clauses together.

Documents that carry this clause

Commercial lease agreement template with outgoings and fit out termsA retail lease is decided by three numbers and two clauses: the rent, the review, the outgoings, the fit out contribution and the make good. This 12 page Victorian lease sets all five out in the open, including the outgoings the landlord is not allowed to recover at all.Licence to occupy template for desk space without a leaseA licence to occupy gives someone permission to use space without giving them exclusive possession of it, which is the line between a licence and a lease. This one covers two desks in a Melbourne studio at $180 a week including GST, with fixed access hours, a right to move the desks on seven days notice, and 14 days to end it from either side.Venue hire agreement template with bump in, noise and a bondHall hire disputes are almost always about time and noise: the hirer thought the hire started when guests arrived, and the committee thought music stopped at eleven. This agreement prices bump in, the event and bump out as three separate periods, and ties the curfew to the planning permit rather than to a preference.

Questions people ask