New Zealand


  • Service: Tax, Tax policy
  • Date: 25/07/2014

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John Cantin

John Cantin

Partner  - Tax 

+64 4 816 4518

Peter Scott

Peter Scott

Partner - Tax

+64 9 367 5852

Submission - GST treatments of bodies corporate 

The discussion document proposes to deem body corporate levies to be for exempt supplies, for GST purposes, with effect from 6 June 2014.
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We note that:


  • The proposed change is properly called a change rather than a clarification.
  • The existing GST rules do achieve the policy outcome sought. However, due to Inland Revenue reconsidering a court decision which it did not appeal as incorrect at the time, this imposes significant compliance costs on many bodies corporate and their members who have followed that court decision.
  • The current GST rules do provide a coherent approach to the policy objectives at a compliance cost for residential bodies corporate while the proposal does not properly address the real compensation and settlement GST problem.



We consider a more appropriate approach would be to deem body corporate levies to be for a supply of an appurtenance to the unit owned by the corporate member. Under this approach, if the unit is used for:


  • exempt, residential, accommodation (either because the unit is occupied by the owner or let by the owner), the body corporate levy would be treated as exempt being the supply of an appurtenance to the supply of residential accommodation (which is exempt). This is consistent with an existing interpretation statement on retirement villages.
  • making taxable supplies (because a business is carried on in the unit or let for commercial use), the body corporate levy would be treated as a taxable supply as it would not be the supply of an appurtenance to the supply of residential accommodation.


This would allow existing GST rules to apply so that:


  • Owners of residential units would incur GST at the body corporate level which should match over time the GST they would have incurred directly.
  • Owners of units used for making taxable supply would be entitled to input tax which would be matched by output tax for the body corporate.
  • Bodies corporate whose owners have mixed uses, would be able to remain registered or to register so that members would have the appropriate GST outcome.


We are also disappointed with the process undertaken in respect of the proposal. We consider the proposal, if it proceeds, should be from the date the legislation is enacted, not 6 June 2014. The retrospective application date does not seem to be justified in light of the practical implications it would have on GST-registered bodies corporate.

Tax submissions - Submissions on draft tax legislation, Government discussion documents and issues papers, & various tax interpretation statements released by the New Zealand Inland Revenue. 

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