Private ruling: Taxable supply
Date of advice: 22 July 2022
Published: November 2022
Ruling period: From 1 July 20XX to 30 June 20XX

Ruling: Q1: Are You making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) to the secondary community corporation? | A1: Yes.

Relevant facts and circumstances: You are registered for GST. You are a community corporation established under the Community Titles Act 1996 (CT Act). The secondary community corporation is a separate entity established under the CT Act and is registered for GST.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5

Reasons for decision: Summary: Under section 9-5, an entity makes a taxable supply if: (a) the entity makes a supply for consideration; and (b) the supply is made in the course or furtherance of an enterprise that the entity carries on; and (c) the supply is connected with the indirect tax zone; and (d) the entity is registered, or required to be registered. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. In determining whether a transaction is a taxable supply, it is necessary to determine whether the transaction falls within the meaning of 'supply' set out in section 9-10. Paragraph 9-10(2)(b) provides that the expression 'supply' includes 'a supply of services' and paragraph 9-10(2)(g) provides that 'supply' includes 'an entry into... an obligation... to do anything'. A community corporation performs a variety of activities in the course of administering the common property and assets of community lots for the benefit of its owners. Section 75 of the Community Titles Act 1996 (CT Act) provides that the functions of a corporation are; to administer, manage and control the common property for the benefit of the owners of the community lots; to maintain the common property and the property of the corporation in good order and condition; to establish and maintain lawns or gardens on those parts of the common property not required or used for any other purpose (where practicable);to enforce the by-laws and the development contracts (if any); andto carry out the other functions assigned to it by the CT Act or conferred on it by the by-laws. Section 143 of theCT Act states a community corporation may provide services of a class prescribed by regulation for the benefit of owners and occupiers of the lots of its scheme and the lots of a secondary or tertiary scheme that comprises part of its scheme. Further, the corporation may charge for the provision of those services subject to any limitations imposed by the regulations. Section 116 of the CT Act states; 1. A community corporation must establish an administrative fund and a sinking fund. 2. Subject to subsection (3), non-recurrent expenditure must be made from the sinking fund and all other expenditure of the corporation must be made from the administrative fund. 3. Expenditure must not be made from a fund to satisfy a financial or other obligation to the owner of a lot who cannot be required to contribute to that expenditure or to pay legal costs that the owner of the lot cannot be required to contribute to, if the expenditure, or part of the expenditure can be traced to a contribution made by the ownerof the lot directly or, where he or she is the owner of a secondaryortertiary lot, by way of a contribution made by the secondary or tertiary corporation.... You invoice the secondary community corporation for administrative fund contributions and sinking fund contributions quarterly. The amounts paid to You by the secondary community corporation is to cover your operational expenditure such as maintenance (including fire systems, lifts, air conditioning etc) and building insurance. Although the term 'services' is undefined, it clearly comprehends the performance of obligations imposed on You to administer, manage and control the common property for the benefit of the owners of the community lots; and to maintain the common property and the property of the corporation in good order and condition of the three (3) community lots. These activities are 'services' within the meaning of 'supply'. Therefore, You are making a supply for consideration to the Secondary community corporation that is in the furtherance of an enterprise it is carrying on; the supply is connected with the indirect tax zone (as it is performed within Australia) and You are registered for GST. There are no provisions in the GST Act that would make this supply GST-free or input taxed, therefore You satisfy the requirements of making a taxable supply, as per section 9-5, to the secondary community corporation.