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01 Oct 2013

Commissioner’s interim operational position on GST registration by Bodies Corporate

CIR's interim operational position clarifies when a Body Corporate should register for GST, where it is carrying on a taxable activity.

The Commissioner of Inland Revenue has released a draft issues paper on whether a body corporate, established under either the Unit Titles Act 1972 or the Unit Titles Act 2010, is able to register for GST purposes.

Whether or not a body corporate can register will depend on whether it is carrying on a taxable activity. There has been some uncertainty about this for some time.

We realise that this uncertainty will be causing difficulties for some bodies corporate.

Therefore, as a temporary measure until the matter is finalised, the following interim position will apply:

  • No body corporate is required to register for GST, irrespective of whether it exceeds the registration threshold.
  • However, a body corporate may choose to register for GST.

A body corporate considering registering for GST under this interim position, should take the following matters into account:

  • The effective date of registration will be when the application is made - at this time the Commissioner will not allow registrations to be back-dated. If it is ultimately determined that bodies corporate are required to register, or able to voluntarily register, further consideration will be given to the effective date of any registration.
  • The consideration in respect of which output tax must be accounted for will include the fees paid to the body corporate by the owners. Therefore, this may result in an increase in the fees payable.
  • However, if it is ultimately determined that bodies corporate do not undertake a taxable activity, and are therefore unable to register, all registered bodies corporate will be deregistered. This may in turn give rise to an output tax liability.

Before deciding whether or not to register, it is recommended that bodies corporate obtain independent advice from a tax advisor.