GST payable to ATO on Council & Water rates when reimbursed - Commercial Property

Discussion in 'Accounting & Tax' started by thesuperman, 4th Feb, 2020.

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  1. balwoges

    balwoges Well-Known Member

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    Aaaaaah! I dont think you have a hope of being compensated by the REA and sometime soon you are going to have to pay the outstanding GST. The ATO does not recognise 'ignorance' as being an excuse for not complying. It would be in your interest to have your accountant do the BAS from now on to save making further expensive mistakes ... :)
    Contact the ATO and explain your mistake sooner than later so you dont have to pay any further fines. I think they charge 9% on outstanding tax owed.
     
  2. thesuperman

    thesuperman Well-Known Member

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    I have gone back to our PM and asked why they never added 10% GST in the past and instructed them to fix their mistake including similar instructions "Prepare a properly drafted tax invoice complying with GSTD 2000/10, I am registered for GST and this is my ACN/ABN" and also mentioned their software should be able to "either create the tax invoice on your behalf with your ABN or in their name and they collect it and forward to you".

    The PM have come back with one sentence "We can legally only charge what the bill is, we cannot amend the amount of the bill before charge the tenants." This seems like BS based on what others here have said. If this is BS and the PM isn't going to do things correctly, surely there must be some legal consequences for the agency?
     
  3. Scott No Mates

    Scott No Mates Well-Known Member

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    [​IMG]

    Really?????

    Definitely a residential agent with no concept of the application GST (and hasn't bothered reading the ATO Guidance).

    Run away......
     
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  4. thesuperman

    thesuperman Well-Known Member

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    Seems that way :( Anyone have any recommendations on good commercial real estate agents who look after the Campbelltown to Camden areas in NSW?
     
  5. Scott No Mates

    Scott No Mates Well-Known Member

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    Check your PM's - one of my contacts is down that way and it's his stomping ground.
     
  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    You are the taxpayer. You are required to issue the tax invoice. And report the correct amount of GST. You cannot expect the agent to be a tax professional and advise you on such matters. That said, they would know better if you used a commercial REA.
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    That said, I have seen instances where the agents raise the tax invoice on their own stationery & ABN etc where the Lessor has not been GST registered - I've got no idea how that they would have accounted for or disbursed the GST to the lessor where the liability did not arise with the lessor passing on the charges.

    Even though the lease may state that the lease is subject to GST, where the lessor is unable to raise the charge due to not being GST registered, does the liability lie with the agent to collect and remit the GST on their own BAS? (this being a different scenario to the OP's).
     
  8. Ross Forrester

    Ross Forrester Well-Known Member

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    Get the agent to talk to the tenants. If the tenants see that the increase in the invoice is a straight 1:1 gst offset they might be ok. The tenants might be registered for gst.
     
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  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    IDK. They arent providing a "tax agent service" but are acting to provide a service that a reasonable person may expect would require a degree of competency in tax. Would a tribunal or court find a real estate PM staff member to be negligent ??? I have doubt. Their PI insurer would likely argue that point. The responsibility for GST lies with the person submitting the BAS not the persons who provide the data that assists in its preparation.

    The agent would never account for GST on client monies. These are held on trust and are not agent income. Same applies to travel agents etc. The agent would only account for GST on its own supplies (eg their % fees etc)
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    That's what I would have thought as well as it struck me as odd but IIRC it was coming through one one of the big 5 agencies.
     
  11. thesuperman

    thesuperman Well-Known Member

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    Is the below necessary or a BS request from the tenant's solicitor? I'm going with that it's a load of BS and not required at all.

    Tenant have come back to our agent saying their solicitor told them they need confirmation/proof that there is no input tax credit or refund being provided to the landlord in relation to the outgoings & that this GST payment is being passed on to the government. They have said our accountant needs to arrange this for us so we can forward this onto the tenants. Once this is done they will pay the additional GST portion on these bills (for the total of this financial year).

    There is nothing in the lease mentioning anything about needing to get an accountant's confirmation before we can charge this.
     
  12. Scott No Mates

    Scott No Mates Well-Known Member

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    @thesuperman - it's BS, I've never provided anything more than the GST bulletin
    Leave it at that. If you are registered for gst and raise a tax invoice, then you're obliged to submit your BAS which will include the gst collected.
     
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  13. thesuperman

    thesuperman Well-Known Member

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    Ok thanks for that :)
     
  14. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yeah but if you dont account for GST and arent registered that liability remains. The tax invoice isnt the tax liability. I have seen more than one instance where a taxpayer failed to register and the ATO pinged them and they sought to then claim input tax credits. Sorry that is denied. The 1./11th of rent become due despite what atax invoice says
     
  15. Scott No Mates

    Scott No Mates Well-Known Member

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    Unless you're registered for GST, you can't charge GST but their accountant should be advising that.
     
  16. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Nobody must charge gst as an addition. That's a fatal assumption. Gst is included. . Gst is a accrued liability . In most cases prices are determined by market and whether it includes or does not include GST does not matter. Hence the supplier have have no recourse but to pay it to the ATO
     
  17. Scott No Mates

    Scott No Mates Well-Known Member

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    WTF? The OP has queried the cost recovery on a GST exempt supply in the hands of the LL. The OP's agent was not recovering GST as per the ATO's guidance so ended up losing 1/11 of the cost of the service.
     
  18. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yeah. That's tax law. The correct thing is the LL adds GST to water rates outgoings. If they don't it's their own fault.

    Tax ruling gstd 2000/10
     
  19. Scott No Mates

    Scott No Mates Well-Known Member

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    So the LL should be out of pocket when recovering services charges? On f###### way! AFAIK that is not the intent of GST 2000/10 & the LL is permitted to collect GST on snow exempt supply sad the LL is supplied not the tenant.
     
  20. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    The issue is two fold. One is tax liability to the LL. They make the supply. Second is ensuring this is recovered. It is not a dispute or argument. It's general law. Real estate agents aren't lawyers. The lease really should address this. And lease prep is a legal service not a real estate agent service. And this is not new. It's 20 years of law.....