Is there GST on Strata Levies? (INSTANT QUIZ)

Strata levies are a significant part of managing and maintaining shared property, and understanding whether Goods and Services Tax (GST) applies is essential for both owners corporations and lot owners. The question of GST on strata levies often arises due to the specific rules surrounding registration thresholds and the financial structure of strata schemes.

Knowing when GST must be charged on strata levies can impact the cost of living for owners and the administrative responsibilities of the strata committee. This guide clarifies the circumstances under which GST applies to strata levies, helping strata owners and managers navigate their obligations with confidence.

INSTANT QUIZ: Is GST Payable on Your Strata Levies?

A Simple Explanation of GST

While most Australians are familiar with the Goods and Services Tax (GST), it is important to understand its application to strata levies. The GST is a broad-based tax of 10% on most goods, services, and other items sold or consumed in Australia.

In essence, the system operates on a few key principles for any enterprise, including a strata scheme:

• Registration: If an enterprise has a turnover that exceeds a specific threshold set by the Australian Taxation Office (ATO), it is required to register for GST.
• Charging GST: Once registered, the enterprise must charge GST on most goods and services it provides. This collected amount is then paid to the ATO.
• Claiming Credits: A GST-registered enterprise can also claim “input tax credits” for the GST included in the price of goods and services it purchases for its operations. These credits reduce the net amount of GST payable to the ATO.

So, is GST Payable on Strata Levies or Not?

The question of whether GST is payable on strata levies turns on one issue—whether the owners corporation must register for GST.

For tax purposes, an owners corporation is treated as “carrying on an enterprise.” Because it maintains property and manages the scheme’s finances, it falls within the GST regime.

An owners corporation must register for GST once its annual turnover reaches the relevant threshold. These thresholds are:
• $75,000 turnover for an owners corporation that is not a non-profit
• $150,000 turnover for a non-profit owners corporation

While an owners corporation can be classified as a non-profit, it is prudent to seek tailored advice to confirm this status.

If registration is required, the corporation must begin charging GST on its levies and fees and can claim GST credits on eligible purchases.

When Must a Strata Scheme Register for GST?

GST Registration Thresholds for Strata Schemes

An owners corporation is legally required to register for Goods and Services Tax (GST) once its annual turnover reaches the threshold set by the Australian Taxation Office (ATO). The precise limit depends on whether the strata scheme is classified as a non-profit body.

The compulsory registration thresholds are:

• $150,000 or more for an owners corporation that qualifies as a non-profit body.
• $75,000 or more for an owners corporation that does not meet the non-profit criteria.

If a scheme’s projected earnings fall below these limits, it is not obliged to register; nevertheless, it can choose to register voluntarily.

Is Your Strata Scheme a Non-Profit?

Most owners corporations are treated as non-profit bodies for GST purposes. The ATO considers a body non-profit when it does not intend to distribute any income—such as bank interest—back to individual lot owners.

Because interest earned on administrative or capital works funds is ordinarily retained by the scheme rather than paid out, the vast majority of strata schemes qualify for the higher $150,000 threshold.

What Is Considered Strata Income for GST?

To assess whether the registration threshold has been reached, all sources of income must be counted in the turnover calculation. This goes well beyond standard levies and captures every revenue stream that bolsters the scheme’s funds.

The primary sources of income for a strata scheme include:

• Administrative and Capital Works Fund Levies – the regular quarterly payments covering day-to-day operations and long-term maintenance, though some owners may face challenges addressing high strata levies.
• Special Levies – one-off contributions raised to meet unexpected or substantial expenses.
• Interest Earned – returns generated from money held in the scheme’s bank accounts or investments.
• Fees and Penalties – income from services such as record inspections or penalty interest from the strata levy recovery process.
• Leasing of Common Property – rent from assets like roof space leased for telecommunication antennas, which also forms part of turnover.

What Are the Practical Implications of a GST-Registered Strata Scheme?

Higher Levies & Issuing Tax Invoices

Once an owners corporation registers for GST, it must add 10% to all strata levies. This results in a direct increase in costs for lot owners, as the GST component is included in their regular payments.

The levy notice issued to each owner will clearly show this GST amount.

In addition to charging more, the strata scheme is required to provide formal tax invoices to lot owners for their levy payments. This creates a new administrative process.

While residential owners generally cannot claim back the GST paid on their levies, owners of commercial units may be eligible to claim an input tax credit if the property is used for business purposes.

Lodging a BAS & Other Admin Tasks

GST registration introduces a significant administrative burden, a compliance challenge that often necessitates legal advice for an owners corporation.

The scheme must implement a more detailed bookkeeping system to accurately track all GST collected and paid. This is necessary for compliance with Australian Taxation Office (ATO) requirements.

A key responsibility is the preparation and submission of a Business Activity Statement (BAS). This form is typically lodged with the ATO quarterly to report the total GST collected on levies and the total GST paid on expenses.

The net difference is then either paid to the ATO or refunded to the strata scheme.

Claiming Back GST on Strata Expenses

A major benefit of being registered for GST is the ability to claim input tax credits. This allows the owners corporation to reclaim the GST it pays on goods and services purchased for the maintenance and administration of the strata scheme.

Eligible expenses where GST can be claimed back often include:

• Strata management fees
• Cleaning and gardening services
• Electricity for common areas
• Repairs and maintenance work
• Landscaping services

Conclusion

Whether GST applies to strata levies is determined by the owners corporation’s requirement to register, which is based on its annual turnover and non-profit status. Once registered, levies increase by 10%, and the strata scheme must manage new administrative tasks like issuing tax invoices and lodging BAS statements.

Navigating the complexities of GST obligations can be challenging for owners corporations. If your strata scheme requires assistance with GST compliance or understanding its specific tax situation, contact the experienced strata lawyers at PBL Law Group for expert guidance tailored to your needs.

Frequently Asked Questions