GST – Unit Title Bodies Corporate
IRD has issued an interpretation statement IS 23/08 which deals with GST and its application to Unit Title Bodies Corporate (UTBC).
Whilst UTBC will have a taxable activity, it will not be liable to register for GST as the value of supplies to its members is not counted towards the $ 60,000 GST registration threshold. S 51(1B) of GSTA.
A UTBC can voluntarily register for GST, in which case it will need to return GST output on supplies to its members, a one- off GST output adjustment in relation to investments it holds and can claim GST inputs on supplies it receives from third parties.
UTBC cannot claim a GST input tax credit on goods and services acquired pre- registration. It may claim a deduction under s 21F when pre-registration goods are disposed of, or deemed disposed of upon deregistration.
Levies that UTBC charges to unit owners for ground rent that relate to units used for the principal purpose of accommodation in a dwelling will not be considered “Taxable Supplies” and will therefore not be subject to GST.
Levies that UTBC charges to unit owners for ground rent that relate to units NOT used for principal purpose of accommodation in a dwelling will be a Taxable Supply and subject to GST.
Where UTBC receives court awards and out of court settlements, GST consequences may apply if the payment is sufficiently connected to a supply. Out of court settlements must be considered individually.
UTBC receiving an insurance pay-out will have an output tax liability on the amount it receives.
November 2023
