From what date do you register a strata company for GST? Is it the start of a tax year, the previous year end, the next levy issue date—or something else entirely? This article explains the correct date and the logic behind it, with strata-specific context.
Understanding the GST Registration Threshold
As a strata manager, you're likely aware that strata companies are generally treated as not-for-profit entities for Goods and Services Tax (GST) purposes. This unofficial classification grants them a higher GST registration threshold of $150,000 in annual turnover, compared to the $75,000 threshold for for-profit entities. In terms of defining 'Turnover' for strata GST purposes, this includes all levies collected from lot owners and any other income sources deemed to be 'taxable supplies' under the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act).
When to Register: The 12-Month Rule
It's all well and good to know the turnover number, but from what date are you required to register? The Australian Taxation Office (ATO) outlines that entities must register for GST if their turnover meets or is projected to meet the threshold within a 12-month period. This therefore necessitates two tests:
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Current GST Turnover - Defined in Section 188-15 of the GST Act, this is the sum of the values of all supplies made during the 12 months ending at the end of a particular month.
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Projected GST Turnover - Outlined in Section 188-20 of the GST Act, this refers to the sum of the values of all supplies made, or likely to be made, during the current month and the next 11 months.
If either test indicates that the turnover threshold will be exceeded, an entity must register for GST within 21 days.
Date of Registration: Aligning with Levy Approval
So, when exactly should you register? For strata companies, the obligation to register for GST is closely tied to the approval of levies. When levies approved at an Annual General Meeting (AGM) or Extraordinary General Meeting (EGM) are projected to bring the total turnover above $150,000 for the forthcoming 12 months, the requirement to register is triggered. The effective date for GST registration is the date these levies are formally approved, as this is when the company becomes aware that the threshold will be exceeded. This is a particularly clear-cut trigger in the strata setting—unlike most other enterprises, turnover is generally known in advance due to the budgeting and approval process required under the various state strata acts. It's very rare that the 'Current GST Turnover' (previous 12 months) is the trigger when it comes to strata.
Practical Implications
When a strata company becomes required to register for GST, the first step is to advise your accounting partner of the date that the levies were approved (which becomes the registration date) and confirm the projected turnover for the following 12 months. If the reason for registration is due to a one-off special levy and turnover is expected to fall below $150,000 in a year's time, consider advising of this at the same time so they can diarise to assess whether GST deregistration—or a shift to annual BAS lodgements—might be appropriate when the time comes.
It’s also important to ensure the GST setting is switched on in your strata software from the registration date. Don’t forget to check for any future-dated levies already raised in the system to ensure they’ve had GST correctly applied.
Quick Takes:
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Strata companies must register for GST if turnover exceeds $150,000 within any 12-month period.
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The registration date aligns with the approval date of levies that push turnover over the threshold.
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Timely registration (within 21 days) ensures compliance with ATO regulations.
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Post-registration, strata companies must charge GST on levies and can claim input tax credits on expenses.
If you require assistance in regards GST registration for strata companies, please reach out to our admin team.
Links:
- Strata GST Registration The 10% Levy Increase Myth
- ATO ID 2016/1 (ATO Ruling that allows the $150K turnover threshold)
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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