Question: Can Executive Committees use term deposits with funds from the Sinking Fund? Is there a need to complete a tax return for interest accrued?
Can Executive Committees use term deposits with funds from the Sinking Fund? We are considering one-year term deposits and reactivating each year.
Is there a need to complete a tax return for interest accrued? What is the difference in term deposit interest being paid compared to being accrued?
Answer: Strata Plans are taxed as public companies and accordingly are required to lodge a return when more than $1.00 in income is derived.
Strata Plans are taxed as public companies and accordingly are required to lodge a return when more than $1.00 in income is derived. On the basis the interest on the term deposit is physically paid to the OC, then yes a return will be required to be prepared under the mutuality principle outlined in TR 2015/3. If the interest is accrued but not paid, no return will be required.
If a term deposit is lodged on 1 February 2022 for 12 months with interest payable at the maturity of the investment. As at 30 June 2022, an amount of interest earned but not paid for the period 1 Feb – 30 June 2022 can be accrued in the accounts. As interest is assessable on a receipts basis, there is no requirement to prepare a tax return on this information alone for the 30 June 2022 year.
Rod Laws
TINWORTH & CO
E: RodLaws@tinworth.com
P: 02 9922 3660
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