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Industry guidelines Ngā aratohu ahumahi

Body corporates and GST

There are new tax rules on how GST applies to body corporates registered under the Unit Titles Act 2010. This includes those registered under the Unit Titles Act  1972. It does not include body corporates registered under the Retirement Villages Act 2003.

When the new GST rules for body corporates take effect

Commencing 26 February 2015 levies and other amounts paid to a body corporate by its members are treated as payment for services supplied by the body corporate.

How registering for GST is affected

When calculating whether the body corporate is required to register for GST, the value of supplies for services made to members is not included in the total value of supplies made in New Zealand by the body corporate.

A  body corporate is only subject to compulsory GST registration when its total value of supplies to a third party exceeds the $60,000 threshold.

GST registration is voluntary if:

  • the $60,000 threshold is not exceeded, or
  • total supplies are only made to its members.

A body corporate that registers for GST on or after 26 February 2015 will be registered from a date after the date of application.  

Returning output tax on supplies

When a body corporate is registered for GST, whether compulsory or voluntary, it is required to return output tax on the full value of both its members and third-party supplies. 

Example - body corporate is not registered for GST

 If your annual supplies to members are ... then GST registration is ...
$70,000 voluntary.
$85,000 plus annual supplies to a third party of $20,000 voluntary.
$50,000 plus annual supplies to a third party of $70,000 compulsory.

Example - body corporate is registered for GST

 If your annual supplies to members are ... then return output tax on total supplies made to ...
$70,000 members is $70,000.
$85,000 plus annual supplies to a third party of $20,000 members and to a third party is $105,000.
$50.000 plus annual supplies to a third party of $70,000 members and to a third party is $120,000.

Any funds and assets held at date of registration are treated as payment for services and must be returned as taxable supplies performed on the day of registration.

Note

"Assets" excludes common property as defined in the Unit Titles Act 2010

Cancelling GST registration

A body corporate registered for GST after 26 February 2015 cannot cancel its GST registration until more than 4 years from the date it first registered.

Deregistration of a body corporate that was GST registered before 26 February 2015, will take effect on or after the date of the application

On deregistration any common property held is valued at zero.

Find out more

Read the Tax Information Bulletin Vol 28, No 3 April 2016 pages 33 to 37.