Topic: Are we paying GST on “GST-free” water? – FLAT CHAT

This topic has 9 replies, 5 voices, and was last updated 14 years, 5 months ago by .

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03/04/2012 at 3:28 pm #8040 Reply | Quote
Mr T
I know there are strong arguments against common water metering in apartment blocks, but there is one issue that I am wondering whether anyone else has looked into. It’s probably easiest to explain with an example:

Our building pays around $50,000 per year in water usage costs. These usage costs are paid by the strata plan & funded through our levies. Our strata plan (like most) is GST registered so it is required to add 10% GST onto levy contributions. So to pay the $50,000 in water rates it is required to raise a levy of $55,000 including GST. It collects the $55,000 and pays out $50,000 for the water rates and $5,000 to the ATO for the GST it has collected.

If the usage was charged directly to each individual owner it would only cost $50,000 in total….versus the $55,000 it costs via strata levies. So we are effectively paying GST on water.

I’m an accountant so sadly I have a good understanding of how GST works, but is there something I’m missing here? A solution might be to identify water as a separate GST free charge on levy notices. Has anyone else seen this?

Cheers

Tony
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Reply To: Reply #15260 in Are we paying GST on “GST-free” water?

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