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[grandir11]

I recently had my AGM for my apartment in NSW. Our complex is 27 lots. I noticed that for the last financial year we budgeted for the line item “Owners Corporation Manager – Taxation Management” of $550 and apparently we spent an actual figure of $1,794 instead a 226% variance over budget (my lord!).

For this year’s budget the strata manager is budgeting $2,000 for the same line item. Tried asking him what the hell is “Taxation Management” and all I got was “it’s part of the strata management fees”.

Im curious to know if any other owner has any idea what “Taxation Management” is? Any reason why it blew way over budget last year?? Are we being taken for a ride by the SM right now?

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[Jimmy-T]

I may be wrong  but I believe Owners Corporation manager is a Victorian term.  Is your strata manager based in Vic? The usual terminology in NSW is strata managing agent.

This is important because strata tax laws are different for NSW and Vic.

Also, unless your strata scheme is earning income above and beyond levies, then you are not subject to making a tax return except to say “Nil tax”.  If that’s the case, this sounds like a nice little earner for doing next to nothing. Ask your strata manager exactly what it is that they have done that you are paying for.

The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.

[optusJo]

in Victoria
https://www.consumer.vic.gov.au/housing/owners-corporations/finance-insurance-and-record-keeping/tax

Assessable income includes:

• income from leasing common property
• interest from investments
• fees for issuing owners corporations certificates and copies of the register and records
• sale or rentals of common property or personal property
• fees for servicing lots

 

[strataact]

I would suspect it is one of the ways the Strata Manager(SM)  covers for a low headline rate management fee.

The SM for our complex has a per unit rate for each of

• Management Fees
• Accounting sevices
• Banking management
• Disbursements
• online portal fees
• Trades compliance

Which as far as I can see serves no purpose other than to split the actual per unit management fee over a number of items, to try and make the Management fee look smaller to those who do not inspect the financial statements closely.

And agree with Jimmy on the tax statement, I ask every year why we pay for an accountant to lodge a tax return for the unit plan when we have no income.

Note this is for an ACT complex

 

 

[kaindub]

Ive had this argument with strata managers in the past

The situation is that even if you do not pay tax, a nil tax return needs to be filed. Somene has to do it, and if the strata manager arranges a tax accountant to do it, and the management agreement states its one of the charges they can make, then you have to pay up.

Once you are on the tax merry go round, its very difficult, but not impossible to get off. Dont expect the strata manager or accountant to assist.

 

[Jimmy-T]

kaindub wrote:

Once you are on the tax merry go round, its very difficult, but not impossible to get off. Dont expect the strata manager or accountant to assist.

Perhaps the committee could instruct the strata manager to NOT file the tax return and leave it to the treasurer.

The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.

[UberOwner]

I agree with strataact – it’s probably a line item that helps to reduce the general service fee or whatever your strata manager calls it.  Could be a way for them to divide up their own costs in managing GST, payroll tax etc.

Ask them for a detailed breakdown on how those fees were spent.  And if it’s all about lodging a nil return, then consider Jimmy’s suggestion.

BTW I asked our strata manager to explain in detail some items on our statement and it took months.  They really didn’t want to justify themselves.  Turns out we had been charged for some very sloppy and ultimately useless work they had done for us.  They ended up waiving the fee as a “gesture of goodwill.”  But more importantly, questioning them and continuing to chase the question up over several months sent a message that we’re watching them and we won’t pay for shoddy work.

[optusJo]

strataact wrote:

The SM for our complex has a per unit rate for each of Management Fees Accounting sevices Banking management Disbursements online portal fees Trades compliance

I don’t understand – so if, for example, the Accounting fees are $100 and there are 10 units- each owner gets a bill for $10.

Is this much different to paying $100 as an Administrative fee?  I mean owners can still calculate the final fee?  What is the advantage of having per unit rate?  In fact this per unit rate would magnify the rather meaningless headline rate which contracts are usually “sold” on.

[Jimmy-T]

optusJo wrote:

I don’t understand – so if, for example, the Accounting fees are $100 and there are 10 units- each owner gets a bill for $10.

I think you may be confusing units of charge with residential units (i.e. lots).  There are different costs per chargable fees.

The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.

[strataact]

optusJo wrote:

Is this much different to paying $100 as an Administrative fee? I mean owners can still calculate the final fee? What is the advantage of having per unit rate? In fact this per unit rate would magnify the rather meaningless headline rate which contracts are usually “sold” on.

Yes Owners can still calculate the final fees, as long as they look carefully at all the charges.  It allows the SM to correctly say “We charge $x per unit as as a management fee”,  but not say and we also charge per unit for

• Accounting services
• Banking management
• Disbursements
• online portal fees
• Trades compliance

So the actual payment to the SM is much larger than the $x management fee.

And also note that this is not charged to each unit as a flat rate, it is

Number of units x rate = Total

Then that total is charged to each unit in accordance with their unit entitlements

.

[Author]

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