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GST Owners Corporations breaking down the basics

A GST registered entity must obtain tax invoices for purchases, and issue invoices with 10% GST included. This GST amount received must be accounted for in a separate account, to be provided to the Australian Taxation Office (ATO). They must also lodge Business Activity Statements (BAS) for either payment or reimbursement of GST. Lodgment can occur quarterly (most common), monthly and annually.

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GST Owners Corporations breaking down the basics

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  1. GST & Owners Corporations: breaking down the basics What is GST? GST stands for Goods and Services Tax and is a 10% tax added to most prices in Australia. What does it mean to be a GST registered entity? A GST registered entity must obtain tax invoices for purchases, and issue invoices with 10% GST included. This GST amount received must be accounted for in a separate account, to be provided to the Australian Taxation Office (ATO). They must also lodge Business Activity Statements (BAS) for either payment or reimbursement of GST. Lodgment can occur quarterly (most common), monthly and annually. When does an Owners Corporation (OC) become a GST registered entity? An OC is considered a not-for-profit entity for GST purposes. This means if their annual GST turnover is (or is anticipated to be) over $150,000, they must register for GST. For an Owners corporation, annual GST turnover typically is the combination of all levies collected, plus any external sources of income such as bank interest, or revenue from leases. Your budget is a great indicator if you should register for GST. OC’s You have 21 days to register once you pass this threshold, or you may face penalties and interest. This is why we recommend registering once your budget is set, as there is no harm in registering early, and you avoid the risk of fees.

  2. Your Owners Corporation Accountant will advise your OC if the threshold will or is likely to be passed. What must an OC collect GST on? The main source of ‘revenue’ for an Owners Corporation is the levies it issues. Once an OC is GST registered, GST must be collected from these levies. This means 10% of all levies collected is set aside and paid to the ATO, usually on a quarterly basis. A GST registered OC must also add GST to any invoices it issues, such as collecting payment for leasing of the common property or issuing Owners Corporation Certificates or copies of the records, for example. Can an OC claim back the GST it pays on goods & services? Yes. For all invoices paid which include GST, the OC can claim this back from the ATO. When you lodge your BAS statement, if you’ve paid more than you owe, you will receive a GST refund. What is a Business Activity Statement (BAS)? The BAS declares how much GST you’ve collected, and how much you’ve paid within the period. The ATO then uses this information to determine your GST bill or refund. This is why your budget won’t necessarily increase once you are GST registered – while you must set aside 10% of levies, you will also claim back 10% on a variety of expenses which you could not before. Read more…

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