Situation: 1. A repair is carried out on an investment property by a sole trader who is not registered for GST. 2. The sole trader sends an invoice to the property manager (with zero GST specified). 3. When the property manager sends the monthly income and expense statement to the landlord, it includes GST for that repair. Question: Can the property manager include this GST?!?
You asked if the PM could include GST - the answer is: Yes, they can. They can even make the GST 17% instead of 10%. It's a free country. But is what they have done correct - the answer is No.
So in this case the ultimate answer is actually no by law. So it was not necessary to state yes in the first place if the answer is clearly no.
As Terry mentioned - the answer is no, they should not add GST to this - they are acting as your agent and paying the invoice on your behalf (with expectations of full reimbursement), they have no liability in the matter (the obligation to pay the expense is yours alone), and so there is no value-add from the Property Manager in this case (otherwise they would be correct in adding GST if they were registered for it). So, no - this looks to be a clerical mistake and you should definitely follow up with the PM about it.
There is something called agency law - where someone else acts on your behalf. Agents are doing this when contracting with tradies - it is essentially you contracting with the tradie.
As an aside, I would imagine that if the PM were to pay the expenses out of their own company bank account (rather than from the trust account), then there may be an argument that they have "added value" to the transaction. But assuming it is all done via the trust account - to my understanding there should be no question, and no GST added.
Correct but why would an agent pay from their own business account (accepting that there may not have been funds in the LL account but they agent should either hold over payment until sufficient funds are received or not contract until there are funds available or get the LL to top-up the account or have the LL pay the account directly). By the agent paying the account, gst becomes payable (GST ruling 2000-01 I think) but the agent exposes itself to the risk of non-payment by the LL.
Sounds like the Agency has simply set the creditor up in their system to check GST as default when entering invoices etc. This can happen quite easily when they assign a specific dissection to a particular creditor as the attributes of the dissection can over write the initially entered creditors info and the PM forgets to go back and edit it accordingly - an easy oversight to make for a rookie/rushed PM. If the gross amount paid is correct, simply ask the PM for an amendment on your Owner's ledger so your accounting side is correct and you don't end up claiming GST credit for something that wasn't. If they've paid more than what should have paid obviously they need to seek a reimbursement and also amend your ledger.
