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Topic
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Loan was taken out by the committee to pay for major common property repairs . Lot owners were then levied progressively to meet loan and interest repayments . GST was charged on the levies . Should or could lot owners have been charged a separate loan repayment amount ( not attracting GST as a financial supply ) ? The GST bill in this case is over $200,000 and probably not refundable to lot owners .
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Replies
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It’s likely that the loan was approved by a majority of owners in a general meeting.
You are correct that there’s no GST on a “financial supply”. However, my understanding is that the financial supply is between the lender and the owner corporation, not the lender and each owner (and not between the owner corporation and each owner). It’s an interesting question and I’m not a tax adviser and can’t give tax advice so you must seek your own advice on this one. While you’re doing so, if you’re an investor, you might ask your adviser about the impact of the strata loan on your after-tax cost of funds.
Regards
Paul Morton
CEO Lannock Strata Finance
Rod Laws at Tinworth has confirmed that the levy to the OC isn’t a financial supply. The levy to service the loan should be an “Admin Levy” which is worth discussing with your tax adviser when you talk to them about after-tax costs.
Paul
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