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The Owners Corporation has to register for GST. We have been told that one of the members of the Strata Committee has to provide their tax file number as part of the registration process, is this correct?
Many thanks.
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No, that is not correct. The owners’ or Committe members’ tax file numbers have nothing to do with the OC.
Why would a strata scheme need to register for GST? Is this normal? What are you selling?
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
As an Tax Accountant for 11 years, managed a commercial strata as an accountant for 6 years this information incorrect.
GST is registered if the strata has a turnover greater than $75,000. Even if all the income of the strata is just Strata Levies if the total sales are greater than $75,000 then the Strata needs to be registered. But remember that means 10% of levies go to the ATO, this will mean a dip in the strata funds, this tends to mean if the budget is done correctly (and depending on the expenses) the levies will increase by 10%.
To register for GST the Strata must have an ABN – this is generally done upon registration of the Strata. Registering for GST requires simply the Strata legal trading name and the ABN. This is a simple 2 minute process for a tax agent or 20 minutes on the phone for the strata manager. It does not require an TFN, any personal details of the owners corp, owners, tenants no one.
Hope this helps.
Perhaps the details are required for signatories to a bank account if the OC has one in its own name?. I’ve had to provide this as a signatory to Incorporated Associations.
@JimmyT said:
Why would a strata scheme need to register for GST? Is this normal? What are you selling?It’s the law – OC/BCs that have an income of $75,000 or more per year (12 months forward projection or 12 months past actual income) must register for and pay GST. And not only pay GST but do BAS (Business Activity Statements).
And it’s not just regular levies that are counted for the GST threshold. Special levies and even unpaid levies (which are counted as future revenue) can tip even smaller OC/BCs over that $75,000 threshold easier than one might imagine. That happened to the 12 lot building where I live and chair the OC.
The ATO also doesn’t consider OC/BCs as “not for profit” organizations which would at least extend the GST threshold to $150,000.
@Missy said:But remember that means 10% of levies go to the ATO, this will mean a dip in the strata funds, this tends to mean if the budget is done correctly (and depending on the expenses) the levies will increase by 10%.
Missy, shouldn’t stratas that pay GST also receive GST credits on their goods and services expenditure?
So the net effect for a strata that spends all its levy income on goods or services should be close to GST neutral? Eventually?
That’s the way I thought it works. But trying to get information from our Strata Manager on our recent GST registration is like trying to get blood out of a stone.
We didn’t actually end up exceeding the $75,000 threshold. We raised a special levy that took it close. But thanks to some late levy payers, our forward projections including their outstanding levies did temporarily exceed the threshold.
When to exit the GST system is now our issue. Even if GST credits mean all or most of the GST paid is eventually returned, there’s still all the administration around GST that has to be paid for (BAS etc).
This PDF from the ATO may be helpful (though complicated – if you are not familiar with the terminology):
Taxation Ruling Income tax: matters relating to strata title bodies constituted under strata title legislation
https://www.ato.gov.au/law/view/pdf/pbr/tr2015-003.pdf
A more user friendly information source from Strataman is here:
@Lady Penelope said:
This PDF from the ATO may be helpful (though complicated – if you are not
A more user friendly information source from Strataman is here:I believe that some of that information is now out out date.
A more recent ruling by the ATO has deemed at all strata body corporates are in fact “for profit” organisations and so do not qualify for the $150,000 GST threshold.
So if a strata scheme raised $4,000/year in levies per lot, even a 19 lot scheme would exceed the $75,000 GST threshold limit.
Austman – It is my understanding that the latest ATO interpretation is that: “bodies corporate are now considered to be non-profit bodies for GST purposes provided they do not have an intention to distribute interest or other income to members.”
See here:
http://sskb.com.au/wp-content/uploads/2016/06/UP2009-GST-Registration-75k-to-150k.pdf
and here:
I don’t think those are valid any more Lady P.
One is an old 2009 document while the other is for bodies corporate in general (not specifically strata).
When I looked at this as close as I could it seems that it’s Tax Ruling TR 2015/D1 that became TR 2015/3 that specifically applies to “strata title bodies constituted under strata title legislation”:
http://law.ato.gov.au/atolaw/view.htm?locid=%27TXR/TR20153/NAT/ATO%27&PiT=99991231235958
Ruling
22. A strata title body will not be taxed as a non-profit company even if it includes non-profit clauses in its by-laws.
It’s explained in many places, but here is an example:
Tax status – a strata owners corporation will be taxed as a “for profit” company …
It seems that after that 2015 tax ruling OC/BCs are now always classed as “for profit” organisations. And that mean the $75,000 GST threshold now always applies.
Thanks Austman. D1 became 3.
I am not an accountant. Perhaps you should seek advice from an accountant.
It is my understanding that ‘Bodies corporate’ are just another name for ‘strata’.
The definition of a strata title body from the Ruling is below. Please note particularly Section (8):
Strata title body
6. The term ‘strata title body’ is a reference to a body corporate
created on registration of the strata scheme under the relevant State
and Territory Acts.7. The strata title body is constituted by the proprietors but is a
separate legal entity with specified powers, authorities, duties and
functions. Though these powers, authorities, duties and functions
vary under the different State and Territory Acts, generally they
include:
• the power and authority to impose a levy on the
proprietors, to make by-laws, to carry out necessary
work, to invest and to borrow
• the duty and function to control, manage and
administer the common property, to maintain the
common property and keep it in a good state of repair,
to effect insurances on the building and common
property and to keep records and books of account.8. A strata title body may also be called a ‘strata title body
corporate’, ‘body corporate’, ‘strata corporation’, ‘owners corporation’
and ‘community corporation’.It is my understanding that Levies are generally excluded from the definition of taxable ‘income’ under the principle of mutuality.
@Lady Penelope said:
I am not an accountant. Perhaps you should seek advice from an accountant.
Our strata management firm (one of the largest in Victoria) does use accountants for this. It’s those accountants that registered the OC where I live and chair for GST last year when it appeared that the OC’s projected levy income would temporarily exceed $75,000 in a 12 month period (due to special and unpaid levies). They are adamant that this the correct GST threshold for OC/BCs.
I don’t think there’s any doubt that OC/BCs must register for and pay GST once the GST turnover threshold is exceeded. And it’s clear on the ATO’s website that the turnover includes levies:
turnover must include levies on unit owners
All my other (larger) OC/BCs are registered for GST.
What appears to have happened recently is the ATO ruling that OC/BCs are now considered “for profit” organisations. That now sets their GST threshold to $75,000 (not $150,000 as it might have been previously).
AFAIK when OC/BCs spend their income on goods and services, which is what they usually do, they receive GST credits on that expenditure. So, eventually, GST becomes an almost neutral tax for most OC/BCs.
Except that it needs administration (BAS reports etc). And funds raised for long term maintenance might not see any GST credits for many years.
When to exit (cancel the registration) the GST system, as my OC can now do if it so chooses, is another matter! On that we are seeking accountancy advice.
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