This article is about GST and cash settlements.
Question: The OC’s insurer offered a cash settlement for a claim on water damage to my lot. The amount was paid to the OC ex GST, and this has been passed onto me. How do I recover the GST?
The owners corporation’s (OC) insurer offered a cash settlement for a claim on water damage to my lot. Because the OC is registered for GST, the agreed amount was paid to the OC ex GST. I paid for the repairs, not the OC. When the OC transferred the money to me, they paid me the amount ex GST. We are now in a legal battle concerning the GST amount.
The agreed cash settlement was over $100,000, so I’ve lost over $10,000.
Answer: For the GST component to be claimable, the invoice must be in the name of the owners corporation.
For an entity registered for GST, insurers can only settle the GST exclusive amount according to tax laws, as in theory, the entity can claim the GST back from the Australian Tax Office in their next tax return. This can create problems for a lot owner seeking a reimbursement where the owners corporation is GST registered, and the lot owner is not.
If you are an owner and not GST-registered, and you wish your invoice to be settled as the GST-inclusive amount, we have detailed the process we recommend below.
Ensure the repair invoice is in the name of the owners corporation and submitted to them. Despite receiving the GST-exclusive amount, the owners corporation should reimburse you the total amount, including GST. The OC will then claim the GST back on their next tax return. It is essential to note that for the GST component to be claimable, the invoice must be in the name of the owners corporation.
If you have not completed repairs, I recommend following the above process to request the GST component of your claim.
Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 1300 554 165
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisenent Australia AFSL No 240549, ABN 15 003 886 687.
This post appears in the April 2024 edition of The NSW Strata Magazine.
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