Question

Garcia lived in a tenement house in the East Harlem section of Manhattan with his two young children. The paint in one of the rooms and in the bathroom was flaking off the walls, and Garcia’s children were eating the paint and the flakes. In spite of Garcia’s several complaints, the landlord did not remedy the problem. Garcia then expended $29.53 for materials and $70 for labor to replaster and repaint the walls in the rooms. He brought suit for the recovery of these amounts from his landlord. Could he recover these amounts from his landlord? Garcia v. Freeland Realty, Inc., 314 N.Y.S.2d 215 (1972).

Answer 1

Yes. If Tenant refuses or neglects to make repairs and/or replacements and/or to maintain the Premises or any part thereof in a manner reasonably satisfactory to Landlord, Landlord shall have the right, but not the obligation, upon giving Tenant written notice of its election to do so, to make such repairs or perform such maintenance on behalf of and for the account of Tenant. Such work shall be paid for by Tenant, as additional Rent, promptly upon receipt of a bill therefor with an eighteen percent (18%) administration charge added to the total.

If the recovery of expenses amounts to a reimbursement, it will be considered as a separate supply made by the business to the client. Thus, the business is entitled to deduct any input tax incurred if the reimbursement is a taxable supply. At this point, it is important to note that the recovery of an expense that amounts to a reimbursement does not result in GST being automatically chargeable by the business when it issues a tax invoice to recover the expense. T