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"The introduction of the GST, way back in July 2000, brought about sweeping changes to strata taxation making it somewhat more complex than ever before. However, even though everyone is very used to the whole GST concept by now, there are many other aspects of Taxation & Strata that you need to be aware of. So, if you're new to Strata, Owners Corporations, Body Corporates and Strata Committees, the summary below will give you an idea as to what you need to look out for and do - if anything. Just remember...this is not tax advice nor is it complete information...it's just an overview - with a little help from the Australian Tax Office. There's also some links to a few relevant web pages that could help."

TAXATION, THE GST and STRATA

Taxation
Latest ATO Ruling
Do Strata Schemes pay 30% or 28.5% small business tax?
GST
Is GST payable on S184 Certificate?
GST on Levies?
To Register or Not...
Is Your Body Corporate (or Owners Corporation in NSW) a Non-Profit Body?
ABN or not...
Some ATO links You Might Need

Something to Consider

Strata Managing Agents (more commonly known as Strata Managers) engaged by Strata Schemes under full management usually consult with strata specialist accounting and auditing firms for all taxation matters to ensure everything is correct and 'by the book'. Self-managed Strata Schemes don't have this luxury and so should seek advice from specialists in this 'taxing' area (sorry - couldn't help myself).

If the increased administrative and accounting work becomes too much, the Owners Corporation of a self-managed scheme may seriously consider using professional Strata Managers to administer all their taxation affairs. Such complex taxation issues really should not be left to the part-time, 'friend-of-a-friend' accountant.

Taxation

Taxation implications for a Strata Scheme usually involve:

income tax
GST
withholding tax
non-mutual income (such as income in the form of payments from companies for the erecting and use of transmission towers or advertising on buildings)

TIP - Make sure you talk to an accountant experienced in the intricacies of Strata Scheme finances and taxation as it can be a veritable minefield if you don't get the right advice. And, unfortunately. there doesn't seem to be much info in cyber space on this topic at the moment. Probably because it IS such a minefield.

An Info Link You Can Try

Here's a reference I managed to dig up while doing some 'internet surfing'. It's a bit dated now (from 2010) AND a little 'light' on some of the finer points - and the taxation % rates and amounts will vary a bit from what they are today - BUT it's better than nothing as there seems to be a distinct lack of information on this topic out in cyber space - Gee, I wonder why that is?

It also makes reference to a repealed ATO ruling (ITR2505) but I have covered that below in the section titled "Latest ATO Ruling". If you come across anything that is great (or even not so great), let me know so I can check it out and add it in (if suitable) - or maybe at least some of it. In the meantime, I will continue to keep looking.

Body Corporate Payment of Income Tax (from StrataLive)

There are many traps the Owners Corporation has to address when dealing with GST and ABN requirements including:

whether or not they're required to register for GST if total levy and other income is below the base limit set by the ATO

what to do if your scheme is not registered for GST and a special levy or some other unusual financial spike during the tax year tips the scheme's income over the base limit

whether or not to apply for an ABN

what if the scheme is mixed-use or commercial or a community?

whether registration is the preferred option for both the ABN and the GST

when owners can claim input tax credits and on what

how to deal with suppliers who do NOT have an ABN - ie applying withholding tax rules

how to deal with suppliers who are NOT even registered for GST

how to lodge Business Activity Statements

how often to lodge Business Activity Statements

general GST and record keeping requirements

many other issues too complex to list here

Just make sure you go through the ATO Issues register for Owners Corporations & Strata Managers section 1 from the ATO as it has heaps of good info on GST and other TAX situations and how it applies to strata schemes, owners corporations and body corporates. In fact, everything that's anything about GST and tax in Strata is in there. Hopefully you will find most of the answers to the above questions - PLUS MANY MORE. Absolutely essential to have a long hard look at.

DON'T FORGET - The ATO page that I gave you a link to (just above) has a menu down the left hand side and, if you see a "V" (i.e. a down arrow) on any of the menu items, make sure to click on them to uncover even more. There's some great hidden gems in there....
This really is the "Go-To" section for taxation and GST issues for strata. Don't miss it!!

Latest ATO Ruling

Late in 2015, the ATO came out with some new rules regarding a number of tax issues for Body Corporates under the strata legislation. It mainly clarifies the ATO's position on matters dealing with accessibility of income, the deductibility of expenses, the way in which Body Corporates will be taxed for income purposes and GST purposes.

The new rulings came out initially in draft form (as TR2015/D1) but became TR2015/3 (in November 2015) replacing TD92/181, TD93/7, TD93/73, TD96/22 and IT2505.

Here's 2 articles that go over some of the details of the DRAFT RULING - but in layman's terms to make it a little easier to understand: (from Bannerman's Lawyers: Important tax Update - TR2015/D1 AND Simeoni-Tax Accountants: TR2015/D1) while here's the link for those wanting to see the "official" ruling: Taxation Ruling 2015/3 - Matters on Income Tax relating to Strata Title Bodies.
I'm sure your specialist strata accountant will be all over this - but only, of course, if you have one...which you should.

Do Strata Schemes pay 30% or 28.5% small business tax?

This is an interesting question that's being asked by many Strata Schemes around Australia. HOWEVER, as with anything to do with taxation, the devil is IN the detail as explained in this article I found on the Leary & Partners (Quantity Surveyors) website : Does the tax cut for small business apply to strata schemes?.
It really does pay to be on top of all these changes so you don't make a silly mistake by ASSUMING anything.

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GST

The GST commenced on 1 July, 2000. From that time onwards there was an increase in the administration and accounting paperwork for all Owners Corporations of Strata Title Schemes around the country.

Is GST Payable on the S184 Certificate?

Ah, the good old (??) Section 184 certificate - previously known as the S109 certificate. Many ask "Do I have to pay GST on my S184?" Well, read this page from StrataLive and see what advice was provided. But, the bottom-line is "YES"...

Now, before you all jump up and down saying "That's for the S109 which is under the old legislation so it doesn't apply". Well, until we hear from the ATO that the new S184 is different to the old S109 for taxation purposes, all the same "Taxation Rules" still apply. So, when you read S109 (re taxation matters), think S184 - and if you see anything about the old legislation (and I know there's one reference on the page you just read), just disregard it. Allow me a little bit of "poetic licence" leeway sometimes - OK? When I get an article that specifically covers GST and the S184, you'll read it 1st here.

GST on Levies?

Ok, the bottomline is essentially this: If your scheme is REGISTERED for GST, then GST MUST be added to the levies.
I believe there wouldn't be many schemes that fall under the current base limits except for the much smaller schemes BUT, just remember that you can't CLAIM GST credits either for any remedial work done at your scheme.

So, it's a matter of deciding (with the help of a strata-savvy accountant) whether it makes financial sense to register for GST or not if your scheme is UNDER the threshold. See the information directly below here for more details.

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To Register or Not....

If your Body Corporate or Owners Corporation (the tax offers groups these terms together) is deemed to be "Non-Profit" by the ATO, then there is no requirement to register for GST as long as the strata scheme's annual earnings (including levies) are expected to be under $150,000 (which has been the 'non-profit' base limit for some years now). For "Profitable" Body Corporates or Owners Corporations, the 'profitable' base limit is still $75,000.

If your scheme does NOT hit these base limits then there's NO legal requirement to register for GST, but the scheme CAN still choose to do so voluntarily. However, before deciding on anything of a tax-flavoured nature, check with your strata-savvy accountant.

Just remember that if a scheme chooses NOT to register for GST, GST is not added to any entity from which income is received - e.g. levies - nor is the scheme able to claimback the GST paid on any expenses the scheme has incurred - e.g. invoices for major works, painting, roof repairs, etc.

Is Your Body Corporate (or Owners Corporation in NSW) a Non-Profit Body?

Here's the ATO definition of a Non-Profit Body: "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". The key phrase here is "distribute interest" as lots of strata schemes will generate interest income from the money in their admin and/or sinking funds but that interest will not be given back (or "distributed") to the lot owners. If this is what happens in your scheme, and the scheme doesn't generate income in any other way then, as long as the annual earnings stay under the $150K, it should be deemed as 'Non-Profit'. As always, if you have ANY doubts, check with your strata-savvy accountant.

Not sure about how this applies to your scheme?

You can read more in the article titled: "Bodies Corporate and GST Threshold" from StrataLive. I realise it's an old reference but it's still relevant and it helps to clarify things in a way all of us can understand. Don't miss it!

And make sure you go to through the Are bodies corporate non-profit bodies for the purpose of the registration turnover threshold section 1.1.5 from the ATO for the "official" words. This one is up-to-date but the only downside is it contains a lot of ATO-speak - which means it can be a little difficult for us 'non-lawyer type' folk to follow...

IMPORTANT SUMMARY
Registration for GST is compulsory if your scheme's annual earnings are anticipated to be over $150K
AND your scheme is deemed to be Non-Profit (which most schemes are)

Otherwise GST registration is required when annual earnings exceed $75K.

Registration for GST is optional if the base limits (i.e. $150K or $75K) are not exceeded.

Here's an official ATO information page on Are bodies corporate required to register for GST? that almost spells it out. Don't worry, it's only short.

So, you planning on registering for GST? Then read the ATO's section on GST Registration. There's a few other helpful links on that page too - so look out for them.

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ABN or not...

An ABN is a number the Australian Taxation Office allocates to a business entity (such as a Strata Scheme) to deal with the ATO, and with other business entities (such as contractors). It's not compulsory to have an ABN, but a business entity (such as a Strata Scheme) will need an ABN

to allow it to register for GST
to avoid having amounts withheld from any payments made to that business entity

IMPORTANT INFO regarding payments made to contractors
All businesses are required to withhold an amount equivalent to the TOP RATE of TAX for any payments above $75 (that are made to another business) unless an ABN is quoted. The TOP RATE (currently 49%) is the prescribed withholding rate for the 2016-2107 tax year.

So, putting that in layman's terms - if a tradesman does some work for your scheme but he doesn't quote an ABN, then under current tax laws, you are required to withhold 49% of the invoice amount and include it in the scheme's tax return at the end of the financial year. Of course this only applies to amounts OVER $75. Let me know if that's not clear...

Read the ATO's Withholding if ABN not provided for the official stance along with some other relevant topics which can be found in the left-side menu.

All Strata Title Schemes have the option of applying for an Australian Business Number (ABN) but must do so if registering for GST.

A Strata Scheme with an ABN and registered for GST:

must include GST in the levies received from the owners
must pay any GST collected to the tax office by quarterly Business Activity Statements (BAS) for each period
can claim input tax credits for GST included in expenses such as electricity, management fees, cleaning, gardening, repairs and maintenance services, etc to help offset any GST collected
must withhold the prescribed amount from any payments made to a business not quoting an ABN
will have some control over the scheme's tax transactions

An unregistered scheme:

cannot charge GST on levies (which is great news for the lot owners)
must still pay the GST on expenses incurred from all other registered businesses it deals with such as contractors, utility companies, etc
cannot claim input tax credits for any GST amounts paid out in expenses
has very little control over the scheme's tax transactions

The BOTTOM-LINE for lot owners in a Strata Scheme registered for GST is that 10% GST definitely applies to all levies raised by the Owners Corporation.

TIP - Every Owners Corporation should look carefully at whether or not they have an ABN and whether or not they are registered for GST. The end result of this investigation will determine exactly how the Owners Corporation deals with their suppliers, contractors and the ATO.

Just be aware that some of the suppliers and contractors used by your scheme may also not have an ABN nor be registered for GST - and there are implications in that too. What fun, huh?
If in doubt, speak to your trusty 'strata-friendly' accountant...you DO have one of those don't you??

Not sure about something? Again, I ask that you make sure you go to the FIRST link in the Australian Tax Office Links section below. It contains heaps of relevant stuff about GST and Tax and BAS and other things. However, beware of the ATO-speak...which is similar to lawyer-speak.

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Some ATO links You Might Need

As the taxation and GST issues affecting an Owners Corporation are very complex and if you are not engaging a strata specialist accountant, it would be advisable to spend quite some time reading up on the subject - especially if your scheme is 'self-managed'. If you have a Strata Manager looking after your affairs you don't have as much to be concerned about. Things can get even more complex if your scheme is commercial, mixed-use or is a community.

It's interesting to note that the NSW Strata Schemes Management Act 2015 and the NSW Strata Schemes Management Regulation 2016 have absolutely nothing on the subject of taxation and there seems to be very little other information around except for what's on the ATO website. It's probably a smart move considering the complexities involved when you bring taxation issues into the mix. Hopefully though, the ones listed below may prove to be a great starting point. The very first link is probably the one to give you almost all of what you need.

Australian Tax Office links

Tax Return ATO Links for Strata Title

Some Generic ATO Information Links

ATO Issues register for Owners Corporations & Strata Managers
There's lots of great info here but it can be a bit overwhelming to begin with.
Just look through the index table on the left s-l-o-w-l-y and really READ the headings.
This section covers almost everything concerning GST, ABN's, BAS, Record Keeping, PAYG & other tax stuff for strata and owners corporations and you can go as deep into the ATO site as you dare just by following the internal links

Strata title body corporate tax return and instructions 2019

Strata title body corporate tax return and instructions 2018

Strata title body corporate tax return and instructions 2017

Strata title body corporate tax return and instructions 2016

Record Keeping for Business

Keeping Your Tax Records

All about the ABN- Just follow the links and look at the dropdown menus to see everything

GST

Business Activity Statements (BAS)

Australian Taxation Office SITEMAP - This little gem is great. It's a QUICK REFERENCE GUIDE to the entire ATO site!! You still have to follow the links but it IS a time saver. Beats using the search box if you know the main area you are searching for. You will still have to dig into the sections but this definitely helps.

Taxation for Businesses
Concentrate on the LARGE DROP DOWN menu UNDER the Business or Not-For-Profit tabs. Absolutely everything pertaining to Business Taxation can be found in here. Just hover over the main tab and you will see a plethora of sub-topics to drill down into. Fun and games ahead for those folks who venture in... Just remember: this section is for General Business matters and not for Body Corporate/Owners Corporation matters. See my other link (above) for that.

Australian Taxation Office homepage - if you need more. Try using the search box (unless of course you know where you are going) but make sure you put " before and after your search term. (e.g. "bodies corporate" or "owners corporation" or "body corporate") This will help cut down on irrelevant findings. Good luck.

Strata Title Terms and Jargon

If you need to know the meaning of one or more of the common terms mentioned above then have a look at the Strata Terms and Jargon Information page.

DISCLAIMER: All information on this website is of a general nature and is intended as a guide only. Readers should check all information obtained from this website for accuracy from other sources and seek professional legal advice before taking any action based on any information obtained from this website. Information on this website should not be substituted for proper legal advice. The owners of this website will not be held responsible for any action taken as a consequence of same.

EXTERNAL SOURCES: The owners of this website do not make any warranty or representations regarding the information, products, services provided by or qualifications of any external sources listed on this website. Readers should make their own appropriate enquiries regarding accuracy, qualifications, licences, etc. The owners of this website will not be responsible or liable in any way for any representations made by any external sources listed on this website.

IMPORTANT NOTE: This website deals with strata matters in NSW, Australia only. Legislation varies in different states and territories and in other countries. For information pertaining to places outside of NSW, Australia please refer to the appropriate legislation for your region.

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