GST On Strata Scheme And Real Estate Agent Services

Responsibilities of the owners’ corporation

claiming GST on Strata Scheme and real estate agent services

The owners’ corporation or body corporate is the body made up of all the owners in a strata scheme and is responsible for:

  • Maintaining and repairing common property of the strata scheme
  • Managing finances of the strata scheme, including setting and collecting levies

For GST purposes, the owners’ corporation is carrying on an enterprise. It must register for GST if:

  • It is considered to be a non-profit body and its turnover is more than $150,000 (turnover must include levies on unit owners)
  • It is not considered to be a non-profit body and its turnover is more than $75,000 (turnover must include levies on unit owners)

It may be considered to be a non-profit body if there’s no intention to distribute interest income or profits from rental or other activities to the members.

Claiming GST credits on maintenance and administration

If an owners’ corporation is registered for GST, the fees or levies it charges members will include GST – for example, for car parking, ongoing maintenance or administration. It can also claim GST credits on purchases made relating to maintaining and administering the property held in common, such as:

  • Electricity
  • Management
  • Cleaning
  • Repair and maintenance services

Owners of commercial units registered for GST may be entitled to an input tax credit if their unit in the strata scheme is used for their business.

Real estate agents are liable for GST on their services

If you’re a real estate agent and registered or required to be registered for GST, you are liable for GST on your service fees, including:

  • Letting fees
  • Lease preparation fees you charge the landlord
  • Lease preparation fees you charge the tenant
  • Agency commissions
  • Statement and administration fees
  • Property inspection fees

Your services are taxable even if the property owner isn’t an Australian resident, or if the services relate to input taxed residential property.

A property owner renting or selling existing residential property can’t claim GST included in fees and charges, because the rent or sale is input taxed.

Claiming agent’s fees as GST credits

GST-registered property owners may be able to claim the GST included in their agent’s fees as GST credits when they:

  • Sell new residential property
  • Sell or lease commercial property or commercial residential property

Commercial residential property includes:

  • Hotels, motels, inns (or similar)
  • Hostels, boarding houses (or similar)
  • Caravan parks, camping grounds

Source: https://www.ato.gov.au/Business/GST/In-detail/Your-industry/Property/GST-and-commercial-property/?page=6

If you have any questions about GST on Strata Schemes and real estate agent services, please contact the accountants at our Sydney office

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