GST Applied to Commercial Properties
We have made changes to our system to accommodate the most sensible solution.
|•||Agents are able to raise tax invoices on behalf of their Lessors. Any income less expenses are periodically passed on to the Lessor. It is then the responsibility of the Lessors to incorporate any income and inclusive tax from the properties managed by the agent into their business income.|
|•||The Lessor is ultimately responsible for all creditor invoices for his own expenses as well as expenses from the VO funds. Although the VO funds are received from the tenant and may be held against expenses, they are the responsibility of the Lessor. Hence all Tax Invoices from creditors should contain the Lessor's name. Tenants' invoices may then be raised, using the Lessor's ACN and may include items that may be either tax inclusive or free of GST.|
|•||Tenant charges for Variable Outgoings which are taxable need to be separate from charges which are made for taxed which are exempt from GST. If a variable outgoing budget contains a mixture of the two, it becomes anomalous as to whether GST is included in the amount charged to the tenant.|
|•||Depending on the terms of the contract, you may be able to adjust most rents so that they become GST inclusive. This inclusive rent is then passed on to the Lessors, who have the responsibility of paying the tax office. In some cases, it may also happen that the contract does not allow for any adjust in the rents.|
The following changes have been made to the system:
There is a field in which to enter an Lessor's (or Body Corporate) ABN. This number is printed on invoices and statements issued to Tenants so that they can claim their input tax credit. You will also be able to print an Lessors Tax Invoice detailing the input tax credits which may be claimed. It shows all charges that have been made by your company for services that have included a sales tax component. It also gives a summary of creditor accounts that have been paid through the Trust Account, with the sales tax inclusive component.
Each creditor now has a field for the ABN (Australian Business Number) issued by the tax office. The Creditors system allows you to enter the GST amount for each item on an invoice provided the creditor has an ABN.
Although the creditor accounts entry for expenses from commercial VO account is the same as that used for residential properties, no input tax credits are available unless it is a property where GST is being paid on the rent collected. If you are dealing with a residential property, it is senseless to enter the GST amount included a total price.
If the Lessor has an ABN, then the words "Tax Invoice To - Lessor Name" will appear on work orders. If the Lessor has no ABN, the word "Tax" will be omitted to avoid confusion with contractors.
The Lessor Charges screen does not include a field for GST. The assumption is made that ALL fees are subject to GST. The only fee that is not chargeable is FID/BAD, which is automatically calculated at the end of the month. If there is a fee that is not subject to GST, then it needs to be recovered through the creditors system.
The Lessor Monthly Statement has not been modified to show details of GST that has been charged by the creditor. The details are shown on the Lessor Tax Invoice. This is the document that may be used by the Lessor to claim input tax credits.
There is now a check-box field against each Property to indicate whether the rent is subject to GST. Some properties that are classified as Residential in our system may be subject to GST, and some properties classified as Commercial may not be subject to GST on rent. . If it is then the Tenant's Invoice/Statement will show the GST amount that has been included in the rent Amount. If there is no GST on rent, then the invoice will indicate that there is NO GST credit available from the rent charge. It is assumed that for these properties, the GST start date is 1st July, 2000.
If your Company's ABN is entered in the System Setup, it will be printed on your letterhead instead of the ACN. The A.B.N. will eventually replace the A.C.N.
The Tenant Accounts and Standing Accounts items now allow a GST amount on any charge. Items such as Variable Outgoings, Electricity, Gas etc can include a GST amount that can be claimed as a tax credit. Other items like water, rates etc are not subject to GST. For this reason it is important to exclude all non-taxable supplies from your V/O budget. It may be necessary to make separate V/O budgets and charges for taxable and non-taxable supplies
If an Lessor or a Body corporate has an ABN, then tax invoices can be issued. There is no advantage in licensing a strata for tax purposes unless the Lessors of the individual units are registered for tax purposes. If this is the case, then they may be issued with tax invoices for which they may claim tax credits. If they cannot claim the tax component of these invoices, then there is little point in registering the strata.
Tax invoices for Electricity and Gas where the period spans the 30th June 2000 are an anomaly. In these cases, two invoices must be issued to each tenant. The first invoice exclusive of tax, covering the period up to 30th June 2000, and the second inclusive of tax for the period thereafter. If the Lessor has an ABN, and there is no V/O account for the property, then for charges after 30th June the invoice will be printed as a tax invoice.
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