Announcements
Looking for information on the JobKeeper extension? Watch the video in our latest news article.

ATO Community

GST enquiry

This post is archived and may not be up-to-date.

Highlighted

Newbie

Views 1143

Replies 5

Hi

My employer rents a factory, the owner of the premises provides invoices for a portion of the cost of gardening and water consumption.  My question is should these invoices include gst, as the owner would have paid gst on the original invoice, some invoices do not all, would really apreciate some clarification on this matter.

Thank you

Margaret

1 ACCEPTED SOLUTION

Accepted Solutions
Highlighted

Most helpful response

ATO Certified Response

Community Support

Replies 0

Hi @Margaret,

 

Thank you for your patience! We realise that it’s taken a long time to provide a response, and we apologise for the delay.

 

Generally, it depends on the lease. In the situation you described, outgoings are being on-charged to your employer pursuant to a lease requiring the tenant to contribute. Where the outgoings are directly related to the supply of the premises, such as gardening, they form part of the consideration under the lease.

 

Assuming all parties are registered for GST, gardening services are a taxable supply. Where the lease does not allow the landlord recovery of the GST, as the landlord is entitled to a GST credit for the supply (assuming they are registered for GST) this is taken into account when the landlord on charges the gardening service.

 

For example:
If the lease with a GST recovery clause stated the base rent was $1000 per month plus the gardening service of $220, the rent charged would be $1,200. The landlord receives a GST credit from the ATO (assuming the landlord is registered for GST) for $20 which leaves $200 on charged and the base rent.

 

If there is a GST recovery clause, the entire $220 is on charged.

 

In the example you gave your employer is contributing to the water charges. Ordinarily they are GST free, but where they are directly referable to the supply of the rent they lose the status of a GST free supply and become part of the taxable supply of rent, irrespective of a GST recovery clause.

 

For example:
If the lease states the base rent is $1000 per month plus the water on charges of $220, the rent charged is $1,220.

If the landlord is charging for a service not directly referable to the supply of the premises, for example photocopying, this is distinctly separate from the supply of the premises and the amount would be separately charged and include GST.

 

You can find further information on our website, and some scenarios that may assist you in the Goods and Services Tax Determination.

 

We can only provide general guidance without knowing all the specifics of your situation.  To obtain more detailed information specific to your circumstances phone us on 13 28 66 between 8am - 6pm, Monday to Friday to speak to a customer service representative.

 

Another option is to contact Early Engagement to discuss your situation. 

 

I hope this helps, SueO

 

5 REPLIES 5
Highlighted

Taxicorn

Replies 4

Government charges: GST is not included in land tax, council rates, water rates, ASIC filing fees or insurance stamp duty.

 

So no GST on water but there should be on Gardening.

 

Highlighted

Newbie

Replies 3

Thank you for your response, my problem is should the owner of the factory, when he reinvoices the charges for instance gardening, should these invoices have gst included.  As the original invoice from the gardening service, to the owner would have included gst, as the company provided the actual service to the owner.  The invoice forwarded to my boss is for half the charge should this include a gst component or just half the total cost of the gardening.

Thank you 

Margaret

Highlighted

Community Support

Replies 0

Hi @Margaret,

 

Thank you for your question.

 

We are seeking some additional information from a specialist area and will respond asap.

 

Thanks, SueO

Highlighted

I'm new

Replies 0

Hi there,

 

You will need to refer to the lease agreement for the property. If there is no stipulation within the lease about the treatment of GST on outgoing costs, they are to be treated in the same way as a reimbursement - GST would only be chargeable on taxable supplies which would not include the charges for water.

 

How they may be able to charge GST is if they are packaging the cost based on an estimation of expenses and the whole bill is shown as a rental fee.

 

The VSBC (Victorian Small Business Commissioner) has a factsheet on outgoings which can be found here

 

I could be wrong, as I'm not an ATO employee

Highlighted

Most helpful response

ATO Certified Response

Community Support

Replies 0

Hi @Margaret,

 

Thank you for your patience! We realise that it’s taken a long time to provide a response, and we apologise for the delay.

 

Generally, it depends on the lease. In the situation you described, outgoings are being on-charged to your employer pursuant to a lease requiring the tenant to contribute. Where the outgoings are directly related to the supply of the premises, such as gardening, they form part of the consideration under the lease.

 

Assuming all parties are registered for GST, gardening services are a taxable supply. Where the lease does not allow the landlord recovery of the GST, as the landlord is entitled to a GST credit for the supply (assuming they are registered for GST) this is taken into account when the landlord on charges the gardening service.

 

For example:
If the lease with a GST recovery clause stated the base rent was $1000 per month plus the gardening service of $220, the rent charged would be $1,200. The landlord receives a GST credit from the ATO (assuming the landlord is registered for GST) for $20 which leaves $200 on charged and the base rent.

 

If there is a GST recovery clause, the entire $220 is on charged.

 

In the example you gave your employer is contributing to the water charges. Ordinarily they are GST free, but where they are directly referable to the supply of the rent they lose the status of a GST free supply and become part of the taxable supply of rent, irrespective of a GST recovery clause.

 

For example:
If the lease states the base rent is $1000 per month plus the water on charges of $220, the rent charged is $1,220.

If the landlord is charging for a service not directly referable to the supply of the premises, for example photocopying, this is distinctly separate from the supply of the premises and the amount would be separately charged and include GST.

 

You can find further information on our website, and some scenarios that may assist you in the Goods and Services Tax Determination.

 

We can only provide general guidance without knowing all the specifics of your situation.  To obtain more detailed information specific to your circumstances phone us on 13 28 66 between 8am - 6pm, Monday to Friday to speak to a customer service representative.

 

Another option is to contact Early Engagement to discuss your situation. 

 

I hope this helps, SueO