Edited version of private ruling

Authorisation Number: 1011668232405

This edited version of your ruling will be published in the public Register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. Contact us at the address given in the fact sheet if you have any concerns.

Ruling

Subject: GST and special levy imposed on strata title plan

Question: Are you, a strata unit title owner, liable for goods and services tax (GST) on a special levy imposed by the strata title manager?

Answer: The responsibility for payment of any GST to the ATO rests with the entity which makes the taxable supply. In this case the strata title manager.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

· You are the owner of one of two strata title units

· You are not registered for GST.

· The units are managed by a strata title plan

· The Strata Title Plan is registered for GST.

· It was discovered that substantial remedial works were required on the strata units.

· An estimate of the cost of the remedial work was obtained.

· The estimate was stated as being GST inclusive.

· An extraordinary general meeting was held between the strata plan manager and the unit owners.

· It was decided at the meeting to impose a special levy on each unit owner.

· The Strata manager originally advised that the levy was GST-inclusive.

· They are now saying that the levy is GST-exclusive.

Reasons for decision

These reasons for decision accompany the Notice of private ruling for LYNETTE HOLLIER.

While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.

GST is payable on taxable supplies. The term 'taxable supply' is defined in section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) as follows:

You make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

(c) the supply is connected with Australia; and

(d) you are *registered or *required to be registered.

However, the supply is not a taxable supply to the extent that it is *GST-free or *input taxed.

(* these terms are defined in section 195-1 of the GST Act.)

Section 9-40 of the GST Act provides that, in general, any liability to pay GST to the ATO rests with the supplier and not the recipient of a taxable supply.

Where the Strata Title Plan No xxxxx makes a taxable supply of which the special levy is the consideration, GST is payable on the special levy.

The amount of GST payable on a taxable supply is determined using a formula set out in section 9-75 of the GST Act. This formula works off the price of the supply which is stated as the amount of consideration paid, without any discount for the amount of any GST payable on the supply. By virtue of this formula, the price of any supply will always be a GST-inclusive amount.

What we have in this case is a dispute between you as the recipient and the strata title manager, as the supplier, as to whether an additional 10% should be added to the special levy to take into account the GST liability.

A pricing dispute such as this one must be resolved by discussions between you and the strata title manager. The ATO does not get involved in such disputes. You may want to contact the Department of Fair Trading for any pricing disputes and the rules regarding quoting a price for goods and services.