Can an owners corporation use term deposits for sinking fund money?

ACT

Committee & Governance

Levies & Finance

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?

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.