If you’re running a profit organisation or a sole trader in Australia, you need to register your business with the Australian Business Number (ABN) and the Australian Taxation Office (ATO). However, if you are a strata company, the need to register for Goods and Services Tax (GST) may be less clear.
What is GST?
Goods and Services Tax (GST) is the 10% added to the cost of goods and services sold within Australia. A Strata Company is required to collect GST and pay GST whether or not they are registered for GST. This often causes confusion as to whether your Strata Company needs to be registered for GST. In this article, we’ll break down GST requirements for Strata Companies so you know if you do or don’t need to be registered for GST once and for all.
If you choose to register for GST regardless of your turnover, you can claim GST credits for your business but will also need to report your GST turnover each month. GST reporting requirements must be met, and it’s essential to check each month to ensure you are meeting your obligations. The ATO website can provide more information about business registration, GST on sales, and claiming GST credits, but it’s best to consult with a tax professional if you’re unsure about any aspects of GST.
When does a Strata Company need to register for GST?
Strata Companies are only required to register for GST if their annual turnover is $150,000 or more or if it spends over $150,000 in a 12-month period. (or project to do so). Typically, a Strata Company’s income is comprised of levies, penalties and bank interest. Once registered, a strata company must account for any GST received, including levies, and can claim back any GST paid to suppliers.
Whilst, you can choose to register for GST regardless of your total income/expenditure, you may not want to unless you have to so as to avoid the additional reporting it requires.
Strata Company GST responsibilities
Once you are registered for GST, it is your Strata Company’s responsibility to account for any GST received (including levies) whilst registered. In addition, a GST-registered strata company can claim back any GST paid to suppliers with who you engage.
Just because you have registered for GST, doesn’t mean they need to be for the rest of time. Once reporting an income/expenditure of $150,000 or more, the Strata Company will need to be registered for the following 12 months, until they no longer anticipate or achieve an income/expenditure of $150,000 or more. If your income & expenditure has dropped below this threshold – and 12 months have passed since you became registered – you can then deregister.
GST Reporting for Strata Companies
If your Strata Company is registered for GST, there are certain reporting requirements you must meet. We recommend visiting the Australian Tax Office website for more information about reporting requirements. As your Strata Management Company, ESM can support you by liaising with a tax professional to produce BAS reports for GST accounting purposes.
Want to know more about GST and strata? Give us a call on 08 9362 1166 or email us at info@esmstrata.com.au. You can also learn more about strata by visiting the News and Resources page on our website.
