Understanding GST Treatment in Strata Insurance Claims

This article will delve into the GST treatment in strata insurance claims, exploring the differences between GST-registered and non-registered buildings and how insurers handle GST reimbursement. Understanding this process is crucial for both owners and body corporates to ensure a smooth claims experience.

GST Treatment for Registered Buildings

 

Insurers will settle the Body Corporate or Owners Corporation for the GST-exclusive amount in any claim for buildings that are registered for GST and can claim 100% input tax credit. The Body Corporate or Owners Corporation can then claim the GST amount back from the Australian Tax Office, effectively being fully reimbursed for the GST portion on the invoice. This process ensures that GST is not paid by the insurer and later claimed by the strata, preventing double payment of GST.

 

What happens if an owner is not registered for GST, but the building is?

 

Suppose you are an owner and not GST-registered, and you wish your invoice to be settled as the GST-inclusive amount. In that case, there is a specific procedure to follow. You must ensure that the invoice is in the name of the Owners Corporation or Body Corporate and submit it to them. Despite receiving the GST-exclusive amount, the Owners Corporation or Body Corporate should reimburse you for the total amount, including the GST. They will then claim the GST back during their next Tax Return. It is essential to note that for the GST component to be claimable, the invoice must be in the name of the Owners Corporation or Body Corporate.

 

Treatment for Non-GST Registered Entities

 

For entities not registered for GST, the process is more straightforward. The insurer will settle the claim for the GST-inclusive amount directly. In the case of owners, the Owners Corporation or Body Corporate can then reimburse the GST-inclusive amount to them.

 

Conclusion

 

Understanding the GST treatment in strata insurance claims is essential for all parties involved in the claims process. How GST is treated differs depending on whether a building is registered for GST. Strata Insurance Solutions is committed to helping our clients navigate the complexities of strata insurance and GST to ensure a smooth and transparent claims experience.

 

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This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.