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 .

Creator

Topic
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
Creator

Topic

Reply To: Reply #15232 in Are we paying GST on “GST-free” water?

PLEASE ... If your property is not in NSW, mention its location (state). Don't identify companies or individuals by name. Don't mention or promote your company or services. Keep acronyms and initials to a minimum. Please, don’t use “quote” unless there is a specific point to which you wish to refer, then highlight (define) that specific passage before you click on "quote". Otherwise just use reply. THANKS.