1. A Practical $8,000 GST Example

Consider a hypothetical Sydney strata scheme with 60 apartments. The scheme is GST-registered and reports quarterly. During July–September it records the following transactions:

Assume all levies are taxable, all purchases qualify for full GST credits, and there are no timing differences or other BAS obligations.

When the scheme pays the ATO, its bank balance falls by $8,000. But that payment settles GST already owed; it is not a second operating expense.

2. Where Does the Payment Appear in Financial Reports?

Income and Expenditure Statement

For this example, income and eligible expenses are reported excluding GST:

The $8,000 GST payment is not deducted again. Doing so would distort the reported result.

Balance Sheet

Before payment, the scheme has a net GST liability of $8,000. After payment, the bank account and that liability each decrease by $8,000.

The bank balance changes, but the payment itself does not reduce the operating surplus.

3. What If the Accountant Records the BAS Payment as an Expense?

Suppose the entire $8,000 is incorrectly allocated to a taxation expense account instead of clearing the GST liability.

The incorrect entry understates the surplus by $8,000 and may leave the GST liability showing as unpaid.

4. What Happens When the ATO Refunds GST?

Imagine the scheme incurs substantial eligible repair costs in a quarter. It reports $6,000 in GST on taxable levies and $11,000 in GST credits.

When the $5,000 refund arrives, the bank balance increases. But it is generally the recovery of an amount already recognised as receivable, not new operating income.

5. Why Might the BAS Differ From the GST Ledger?

Sometimes the amount on a BAS differs from GST balances shown in the accounting system. This can happen because of the GST accounting basis and transaction timing.

Likewise, GST credits on eligible supplier invoices may be attributed when payment is made under cash-basis GST accounting. The accountant should explain and reconcile these timing differences rather than forcing figures to agree.

6. Five Checks Strata Managers Should Make

1. Check the BAS allocation. A GST-only payment should settle the GST liability, not create another operating expense. BAS payments containing PAYG or other obligations need to be split appropriately.
2. Review the GST clearing account. Understand any remaining balance and obtain a reconciliation.
3. Verify GST credit eligibility. Not every purchase qualifies for a full credit; documentation and transaction treatment matter.
4. Look at unpaid levies and invoices. Cash-basis GST can create timing differences between accounting records and BAS reporting.
5. Review fund allocations. Ensure administrative and capital works or sinking fund records reflect the correct transactions and applicable scheme requirements.

7. A Balanced Bank Is Not the Whole Story

A transaction can be paid to the right recipient, for the correct amount, and matched to the bank statement—yet still be recorded in the wrong account.

This distinction matters when managers rely on financial statements for levy planning, cash flow discussions, budgeting and committee reporting.

8. One Question Worth Asking Your Accountant

The next time your scheme makes a significant ATO payment or receives a GST refund, ask:

A clear answer should explain the transaction without creating confusion between cash movement, liabilities and operating results.

Final Thoughts

An $8,000 ATO payment is not automatically an $8,000 expense. A $5,000 GST refund is not automatically $5,000 of income. And a reconciled bank account does not, by itself, guarantee accurate financial classification.

Good strata accounting is about ensuring the numbers tell the right financial story.