This Q&A about privacy and correspondence within a body corporate has been answered by Tammy Lynch, Tower Body Corporate.
Table of Contents:
- QUESTION: If a Body Corporate has never had an income, do they need to lodge a tax return every year to declare no income or would a single notice informing there will never be an income suffice?
- QUESTION: Are we required to have an audit of our body corporate accounts carried out? If so, how often and who should conduct the audit?
Question: If a Body Corporate has never had an income, do they need to lodge a tax return every year to declare no income or would a single notice informing there will never be an income suffice?
Answer: It is probably best to lodge an annual zero-income notice.
Strata title bodies corporate are treated as public companies under the tax law and must lodge a tax return for any year in which they derive assessable income over $1.
Income from levy payments and contributions are exempt from income tax. If levy payments and contributions are the only income that the entity has received, there is no requirement to lodge. However, income does include factors such as interest received from a bank account and most body corporates would derive sufficient income from this item alone to necessitate a tax lodgement.
It may be possible to lodge a permanent exemption application but in that instance it could be difficult to change back if income is earned and you need to lodge. It is probably better to lodge an annual zero-income notice.
For further information please see the ATO web page on strata tax: Taxation Ruling
This post appears in Strata News #453
Question: Are we required to have an audit of our body corporate accounts carried out? If so, how often and who should conduct the audit?
Are we required to have an audit of our body corporate accounts carried out? If so, how often?
If this is requested to be done at an AGM, our we best to use our current accountant or should this be done by another company suitably qualified?
Also, once complete, are we able to ask to see the result of the audit?
Answer: Unless the body corporate has resolved by special resolution at the AGM not to have the statement audited, the body corporate must have its statement of accounts for each financial year audited by an auditor.
The body corporate must keep proper accounting records and each financial year, prepare a ‘statement of accounts’ showing the income and spending of the body corporate for the financial year. A copy of the statement of accounts must accompany the notice of the Annual General Meeting (AGM) after the end of the financial year for which the accounts have been prepared.
Unless the body corporate has resolved by special resolution at the AGM not to have the statement audited, the body corporate must have its statement of accounts for each financial year audited by an auditor.
The motion relating to the appointment of an auditor:
- must be included in the agenda for the meeting; and
- must include the name of the auditor proposed to be appointed; and
- is not voted on if, it is resolved not to have the statement of accounts audited.
The motion for a special resolution must be:
- in the form ‘that the body corporate’s statement of accounts for the financial year (state the financial year concerned) not be audited’; and
- accompanied by a note ‘NOTE: If you want the accounts to be audited, vote ‘no’; if you do not want the accounts to be audited, vote ‘yes’.’.
Who may perform the audit?
The body corporate audit may NOT be audited by a committee member, body corporate manager or any associate of these persons.
The person undertaking the audit must be a member of:
- CPA Australia or
- the Institute of Chartered Accountants in Australia; or
- the Institute of Public Accountants; and
- have a total of 2 years auditing experience.
On completion of the audit of the body corporate’s statement of accounts for a financial year, the auditor must issue a certificate:
- stating whether the statement of accounts gives a true and fair view of the body corporate’s financial affairs; and
- if the statement of accounts does not give a true and fair view of the body corporate’s financial affairs— identifying any deficiencies in the statement; and
- a copy of the auditor’s certificate must accompany the notice of the next annual general meeting held after the certificate is given.
Body Corporate/Strata Property auditing requirements vary from state to state.
The above information is relevant to schemes registered under the Queensland Body Corporate and Community Management Act:
- Standard Module
- Accommodation Module
- Commercial Module
Schemes registered under the Small Schemes Module do not have strict auditing requirements and it is not compulsory for a motion about the audit to be on the agenda of the AGM.
Schemes registered under the Specified Two-lot Schemes Module are not required to maintain a bank account and therefore do not need an audit.
The information herein is general information only and is not intended to constitute, legal, financial or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.
This post appears in Strata News #379
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- QLD: Q&A Can I Access Body Corporate Records
- QLD: Q&A Privacy and Correspondence within Body Corporates
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