Preparing a strata budget is the point where GST obligations can quietly kick in. This article walks through what to watch for, and what to do, when proposed levies (all levies in total) push past the $150,000 annual threshold for the first time.
GST Registration and the $150,000 Levy Threshold
You're preparing the draft budget and proposed levies for an upcoming AGM. You’ve worked through quotes, looked at maintenance schedules, and adjusted for inflation. The numbers are adding up — maybe more than expected. When it comes time to proposing the levies, you note that they're going to be close to (or above) the feared (somewhat unnecessarily) $150,000 mark.
This is the moment to pause and consider whether the building may now be required to register for GST.
GST registration through 'levy creep' is becoming increasingly common as aging buildings demand more upkeep and cost pressures mount across the board. Once that $150,000 threshold is triggered, a few simple adjustments can make sure the budget remains accurate and compliant—with minimal impact to lot owners.
Adjusting Your Budget for GST Registration
If total levies are projected to exceed $150,000 and GST registration is required, the following steps should be taken during the budgeting process:
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Reduce applicable expenses by 1/11 - Most budgeted expenses will include GST that the strata company will be entitled to claim back once GST registration takes place. Reduce these items by 1/11 to reflect the net cost post-GST. This typically includes maintenance, cleaning, gardening, and admin fees. Expenses not subject to GST (like water, wages, stamp duty on insurance premiums and payments to suppliers who are not registered for GST) should be left as-is.
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Include a new line for BAS preparation - Once registered, the strata will need to lodge four BAS per year and this should be incorporated into the accounting fees budget line item.
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Adjust levies for the impact - After reducing GST-inclusive expenses and adding BAS fees, the levies should be recalculated. A 10% GST component must then be added to the new levy amounts (automated by simply marking the property as registered in your software (Property IQ, StrataMaster, StrataMax etc).
Compliance and Communication
It’s best to consider potential GST registration before finalising the budget. This ensures the levies presented to lot owners already account for GST, avoiding the need to revise figures after the AGM or EGM.
If levies exceed $150,000, the strata company is legally required to register for GST within 21 days of the approval date. To maximise the benefit of GST credits on upcoming expenses, it’s recommended that managers notify their accountant as early as possible. At a minimum, your accountant will need the strata name, ABN (if not already on hand), the projected levy income for the year, and the intended date of registration.
It’s important to understand that accountants do not routinely monitor levy levels across all buildings. At Ascend, unless we’re preparing the budget ourselves or have a specific arrangement in place, we rely on our strata manager partners to alert us when registration is required. This means the responsibility sits with the manager preparing the levies to recognise when the threshold has been exceeded and act accordingly. Vigilance will minimise the risk of ATO penalties for backdating registration by more than 21 days.
If you require assistance in regards to GST budgeting for the properties you manage, please reach out to our admin team.
Quick Takes:
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Be aware of the $150,000 GST threshold when preparing annual or special levy budgets.
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If registration is required, reduce GST-inclusive expenses by 1/11 and include a BAS preparation allowance.
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Recalculate levies to include 10% GST—usually only a minor increase after adjustments.
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Let your accountant know early, as backdated registrations can lead to ATO penalties.
Links:
- GST Registration: The 10% Levy Increase Myth
- Strata News: The ATO has Flipped It's Stance on Penalties
The above content is of a general nature and should not be relied upon as professional advice. Ascend encourages readers to seek advice from suitably qualified professionals in relation to their specific circumstances and not to rely solely on the information provided above. Please contact our office for more information.
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