This article about whether, in NSW, a Strata Plan needs to submit a tax return has been supplied by Caren Chen, TINWORTH & CO.
Question: Does our Strata Scheme need to submit a tax return? Our ONLY income is from the owners corporation fees for maintenance and administration. Does this mean there is no assessable income?
Does our Strata need to submit a tax return? Our ONLY income is from the owners corporation fees for maintenance and administration. Does this mean there is no assessable income?
We have been running our own strata affairs through our elected Strata Committee since our inception without the involvement of a strata management company.
Answer: Like all companies, a Strata Plan is required to prepare and lodge an Income Tax Return annually if it has at least $1.00 in assessable income.
Like all companies, a Strata Plan (SP) is required to prepare and lodge an Income Tax Return (ITR) annually if it has at least $1.00 in assessable income.
A Strata Plan is taxed under the principle of mutuality which is based on the proposition than an entity cannot derive income from itself (assessable income). Meaning an entity’s taxable income consists only of income and expenses derived from external sources (Non-assessable income).
A Strata Plan does not need to lodge an ITR where it has no assessable income. However, the Strata Plan is still obliged to advise the ATO of this fact in order to avoid unnecessary compliance action. The ATO has made it clear that appropriate advice of nil return is required for each individual year for which a Strata Plan is not required to lodge a return.
This also applies for a self-managed strata scheme. A Strata Plan is treated by the ATO as an Australian Public company for income tax purposes but is taxed under the principle of mutuality. Hence, whether the Strata Plan is Self-managed or engaged with a strata agency to manage their strata scheme from ATO it is still under company income tax purposes.
Have a question about whether a Strata Plan needs to submit a tax return in NSW or something to add to the article? Leave a comment below.
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This post appears in Strata News #348.
Looking for strata information concerning your state? For state-specific strata information, take a look here.