This article about the income from body corporate common property has been provided by Tammy Lynch, Tower Body Corporate.
Does your body corporate receive income from public car parking, payments for the use of common property to convene functions/conferences and the like, or payments from telecommunication companies and other businesses which erect communication towers on the roof of your complex or affix advertising signage to the common property?
If so, Taxation Ruling No. TR 2015/3 “Income tax: matters relating to strata title bodies constituted under strata title legislation” issued by the Australian Taxation Office, probably applies to such income. The effect of this Ruling is that the ATO will apply a consistent approach across strata schemes in all States and Territories, notwithstanding the different ways in which strata title legislation describes how common property is held.
Most importantly, the ruling determines that the income received from the common property is taxable on the income tax return of the owners, not the Body Corporate.
To the extent that a body corporate may not have done so since TR 2015/3 was released, this will in future require that end-of-financial-year statements be issued to each lot owner which set out the owner’s proportions of income from common property (based on their lot entitlement) and associated deductions – which each lot owner then needs to include in their annual tax return.
This article is a brief summary of Taxation Ruling No. TR 2015/3 which is quite lengthy and complex. If you are a lot owner in a strata scheme/body corporate that derives income from sources such as those mentioned above, you should, if you have not previously done so, alert your tax agent, and if considered necessary, seek independent financial advice about the possible tax consequences this Ruling may have on your personal financial circumstances.
The full text of Taxation Ruling No. TR 2015/3 can be found here.
This post appears in Strata News #391
Have a question about income from body corporate common property or something to add to the article? Leave a comment below.
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
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