If an owner can’t assist with common property maintenance, can they make a financial donation instead?
In our strata scheme, lot owners volunteer to maintain common property.
Can a lot owner who is not physically able to contribute labour make a financial donation to the strata company instead? Would this donation be considered income to the strata company?
A lot owner can make a voluntary financial contribution to the strata company.
Matthew Faulkner, Matthew Faulkner Accountancy:
If a general meeting approves a donation as a replacement for volunteer labour, that is fine. It is still mutual income like a levy and not taxable.
Luke Downie, WA Strata Consultant:
Yes. A lot owner may make a voluntary financial contribution to the strata company.
The Strata Titles Act 1985 (WA) does not prohibit a strata company from receiving donations or voluntary payments. These payments must be genuinely voluntary and cannot replace or offset that owner's levy obligations, which must always be raised in proportion to unit entitlements.
A voluntary payment is treated as income. It is not a levy and should be recorded in the financial statements as "Other Income". This is standard accounting practice and does not create compliance issues.
For transparency, the strata company should minute the donation, issue a receipt, and ensure the payment is not tied to any obligation or used to alter the owner's levy position.
This explanation reflects my professional experience in the strata industry, but it is not legal advice. For a definitive position, a legal opinion should be obtained from a lawyer who specialises in strata titles law.
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I am an FCPA and Tax Agent and run the only accounting firm in NSW that specialises in strata accounting. Whilst my practice is 11 years old, I have 15 years experience in the industry.
Based in Helensburgh (northern Illawarra) we audit strata from NSW, VIC, QLD & ACT.
My firm also lodges tax and BAS and acts as an ASIC agent too for those very old buildings that are Company Title Strata.
Most people find Strata to be a dry subject. Talk to Luke about Strata Legislation and you will soon see how enthused and excited he becomes about the topic. With over 20 years in the industry providing Strata Management and consultancy services. Luke owned and operated his own Strata Management business here in Perth for over 10 Years as well as being the state lecturer in Strata Management at Central Tafe at that time.
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