How can I raise a general policy issue with the ATO? Specifically, the issue of lot owners in a body corporate being required to pay GST on their water supply just because the water supplier bills the lot owners directly for the water service charge, but invoice the body corporate for the water usage and neither the body corporate nor the water supplier have taken the trouble to create an explicit agency arrangement. The body corporate invoices lot owners for the water delivered to the lot based on a sub-meter for the lot.
I want the ATO to review their inequitable policy which imposes GST on water supply, an item specifically exempt from GST by the GST Act, on a contrived legal argument that the charge by the body corporate is some-how not a charge for water supply. This ignores the fact that the lot owner is charged based on the supply of water when they turn on their taps.
Unfortunately only the party to a private binding ruling can lodge an objection - ie the body corporate - not the affected lot owners.
As it happens, this will no longer directly concern me, as I am selling my apartment and moving to a retirement village.
However, I believe this policy is just plain wrong an unfair on the very many people who pay for their water usage via a body corporate. It also seems some residential landlords or their agents may also be unnecessarily adding GST on water usage reimbursement invoices, based on GTR 2000/10 which is meant to apply to commercial leases.
I have tried to get this addressed by writing to the Treasurer and other politicians, but seem to have been blocked by their staff members.
Any guidance on how I can raise this issue with the correct ATO department would be greatly appreciated.
A brief summary of my complaint is show below.
Thanks in advance.
Blessing,
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GST Inequity on Essential Water Supplies
1. The Core Issue: "Tax on a Tax-Free Item"
Under Subdivision 38-I, water supply is intended to be GST-free. However, the ATO’s current administrative stance creates a scenario where the same 1,000 liters of water is taxed at 0% for some residents and 10% for others, based solely on the administrative "middleman" (Body Corporate or Landlord) and the skill of the applicant for a private binding ruling.
2. The Fundamental Principle
The overriding principle should be straightforward:
If a line item on a tax invoice is for water supply charges, the GST rate is zero. No ifs, no buts.
A consumer's entitlement to GST-free water should not be defeated by the billing arrangement imposed on them by the water supplier. Whether that supplier chooses to use a body corporate, a landlord, or an agent to collect the charges is irrelevant to the consumer's statutory entitlement. The substance of the transaction is a water supply charge, and it should be treated as such.
3. The Jurisdiction Inconsistency (The Victoria Example)
The ATO’s interpretation fails to account for the disparity created by state-based utility laws:
- Direct-to-Tenant (e.g., Victoria): In Victoria, under the Residential Tenancies Act 1997 and Water Act 1989, water authorities often bill tenants directly for usage. Because the supply is from the authority to the end-user, it is 0% GST.
- Indirect Recovery (Other States/Body Corporates): In jurisdictions where the landlord or Body Corporate is the account holder and "recovers" costs from the occupant, the ATO classifies this as a "taxable on-charge."
- Result: A tenant in Melbourne pays $0 GST on their shower, while a tenant in Brisbane or a strata-owner elsewhere may pay 10% GST on the exact same volume of water.
4. The "Agency vs. On-Charge" Conflict
The ATO’s internal guidance is failing to recognize the Conduit/Agency principle:
- The Inconsistency: The ATO "Complex Transactions" department has historically recognized that Body Corporates act as conduits. Yet, recent Private Binding Rulings (PBRs) are overriding this, claiming the Body Corporate is "supplying premises/management," not water.
- Violation of GSTR 2000/25 (Para 24): This ruling acknowledges that the delivery of water can involve more than one supplier. The ATO is ignoring its own ruling by refusing to see the Body Corporate/Landlord as the final "link" in the delivery chain for an essential service.
5. Systemic Inequities to be Investigated
I want the ATO to issue a Class Ruling or Legislative Instrument to ensure horizontal equity across all Australians, regardless of:
- Property Title: (Standalone house vs. Strata scheme).
- Tenancy Structure: (Direct utility account vs. Landlord recovery).
- State Legislation: (Whether the local Water Act allows for direct billing or necessitates "on-charging").
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