NZ Clarifies GST Rules For Bodies Corporate

New changes to body corporate rules will be a change worth noting for landlords and unit owners. Queen City Law are very experienced in dealing with body corporates if you have any other questions don’t hesitate to contact one of our team.

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New Zealand’s Revenue Minister, Todd McClay, has announced his intention to clarify through legislation that bodies corporate will not be required to register for the goods and services tax (GST) and file returns, thereby aligning them with the rules for other residential property owners.

Bodies corporate are entities established by a group of property owners in an apartment building or similar complex. Funded by members’ fees, it allows the property owners to manage building maintenance, insurance, administration, and repairs collectively.

The proposed law change is in response to legal analysis that suggested bodies corporate may have to register for GST.Leaky Building - SIte Visit

“This clarification is a question of pragmatism, fairness, and eliminating compliance costs,” Mr McClay said. “Most bodies corporate are not currently registered for GST – to now require them to do so would impose significant compliance costs. Excluding them will ensure that the legislation aligns with operational practice and provides clarity and certainty.”

Being registered for GST would require a body corporate to pay GST on their fees and allow them to claim back the GST cost of their expenses.

Other types of residential property owners (such as owners of stand-alone homes) cannot register for GST or receive GST refunds for maintenance or building repairs. Making the tax treatment of bodies corporate similar to other types of residential property owners is therefore fairer, the government said.

“This Government strives for fairness, consistency and the reduction of compliance costs in the tax system,” McClay said. “This clarification for bodies corporate is another example of that. The Government’s intention is to include the change in the next available tax bill and for it to apply retrospectively with a saving provision to preserve tax positions that people have taken before today’s announcement.”

“Most bodies corporate will not have to take any action at all,” he added.

– See more at: Global Tax News
 
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