The previous day we had received a formal letter from the Lord Mayor announcing the Council decision to provide us with a $25,000 Grant to ‘help us with our project’. It has therefore been included above in our project financing. At this meeting we agreed we need to develop an implementation plan, including a communication program for the other Owners and tenants. Our first step will be to move at the forthcoming Strata Annual General Meeting on 12/11 that the cost of a new Main Distribution Board be added as part of the Strata 10 year Capital Plan. Alex agreed to draft an Amendment to be put to the AGM.
Discussion about a communication program for the residents concluded that it was most likely that one session of 1-2 hours would be preferred so Neil agreed to include this option in his information update letter to be sent out this weekend. If possible, we will provide at least one information session before Xmas. We also decided to invite our strata community to a pre-Xmas drinks party.
We had a lengthy discussion about the issue of GST costs for our project after noting that the Council letter said that “GST is not included in your grant amount. It is payable in addition if your organisation is GST registered.” Bo undertook to look into this issue in more detail and has provided the following:
“I have done further research about whether it is beneficial to register GST for our strata. My research shows we are unlikely to gain any benefit from GST registration for these reasons.
First, if an owners’ corporation is registered for GST the fees or levies it charges its members will include GST – for example, for car parking, ongoing maintenance or administration. Our current strata levy is around 60K per annum without GST. Following GST registration we would be required to collect an additional 6K GST from owners and pass this to the ATO. This would offset the net GST credit from our capital expenditure of the solar system.
Second, I also considered whether it is possible to register the GST just for the period when the capital expenditure is incurred and cancel the registration (e.g. deregister GST after claiming back the GST credit to avoid future GST liabilities). The answer is no. Under GSTR 2000/24, if the entity cancels its GST registration and still has assets for which the entity previously claimed GST credits, the entity may need to repay some of those credits. For our body corporate, unless we keep the GST registration for five years, we would have to repay the GST credit to the ATO.
Our body corporate’s turnover is currently under the GST threshold which is why we are not required to register GST. It is better to keep this way.
Thus, it was worth considering the GST registration scenario due to the size of the capital expenditure involved. At least we know we don’t have to worry about GST when working out our budgets which is one less thing to worry about.”