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Whale said:
An excellent post; thanks Ben!
Call it paranoia, but I'll keep submitting the ATO's 2 page Strata Title Body Corporate Tax Return, where I declare the interest that our Plan receives on its deposits, and make our 30% contribution to Mr Swan's budget surplus in 2012/13.
A sensible course of action. It would be nice if the ATO simplified the form for people declaring little more than interest on the bank balance.
Whale said:
……
Then I found out that all income other than that from Proprietors' contributions was not covered by the ATO's ruling under the principle of mutuality, and that we should have been submitting Company Tax Returns for years. So much for audits !!….
Audits; most people in my SP think because we get an audit every year that everything is fine but the audit is not about how well the OC complies with legislative and tax obligations.
The auditor basically looks at a percentage of all the financial transactions, checks they exist and then extrapolates that result to say that everything is in order, i.e. the auditor checks that the Treasurer is not squirreling away money for a trip to Spain. The auditor does a equity report (financial position), does an income and expenditure report and then sends us a bill.
On an income/expenditure report it is clear if an OC is getting non mutual (and / or business venture) income but the auditor is generally not commissioned to say an OC should be paying tax, or that the levy interest is not calculated properly, or that the accounts are not as specified by the SSMA or PSBA or that the OC needs to strike a special levy to repay money it transferred from the sinking fund to the admin fund – the auditor just checks that money is accounted for.
There are 3 types of strata income*
mutual – tax free
non mutual – OC pays tax on it
business venture – each owner needs to declare their share on their individual tax return
Most OC's need only worry about the first 2 types of income and most do not bother with the non mutual stuff because most OC's do not make a lot of non mutual income anyway. Most SPs are relatively small consisting of less than 20 units, not a lot of tax is being avoided. Once larger SPs become more common then the ATO might come looking for its tax money. One day legislation might require large OC's to submit financial reports like “mum and dad” incorporated clubs have to. It is funny how the local sport club with its $1500 bank balance needs to submit annual financial reports (form A12) to OFT but OC's operating budgets of hundreds of thousands of dollars do not.
The point is that audits are just a paper trail check and have little to do with legislative or tax obligations.
*See chapter 9 of NSW Strata and Community Schemes Management and the Law for more details on the 3 types of income and how to deal with them – available from any good library
This is an interesting topic for a few reasons.
We (my SP) make significant income from various source in our SP that is not principal of mutuality income. We never declare the non-mutual amounts, some years we make between $10-20k. The auditors report shows we are not paying tax and that we scream principal of mutuality in relation to our SPs finances.
One treasurer once claimed there is a threshold ($ amount) the OC muct pass before the ATO cares about non mutual income?
Is this true?
struggler said:
…..
I would like to see penalties applied to EC's who make uninformed, unfair decisions that may adversly affect the lives of residents and the integrity of the complex. They should be made more accountable and any incidence of harrassment or bias taken further. And EC's members who participate in behaviours unbecoming a person in “authority” should be asked to step down. I know from past experience that many people go onto an EC in the belief that they can approve works for themselves, deny valid works for others and play favorites with those who bit their tongues.
…
I completely agree but what chance is there the NSW Govt reforms would be so dramatic as to make a departure from the 50 year old concept of laypeople / owners running their SPs without any real accountability?
If ECs are made accountable, and they should be, then Mr and Mrs Average Owner with little strata savvy are not about to step up and fill seats and that is a radical departure from the current situation.
JimmyT said:
Billen Ben said:
Do not forget the EC does not need the SMs permission to take action and that the SM is subordinate to the EC. If you have the support of the EC then the EC can take action if it decides it wants to.
The problem here seems to be that the EC wants to take action and the Strata Manager is blocking them and they don't know where to turn because the one person who is charged with helping them is doing the opposite.
I would begin by saying this SP should not have an EC if the EC does not know how to call a meeting and pass a motion. This could well be the problem that exists in many SPs who have an agent and the agent is a little dodgie; i.e. ECs not knowing what to do. This is why ECs across NSW need some form of training.
Under these circumstances the EC need to take the time to up-skill and learn what they can do without the need to deal with the strata manager and his obstructive, blocking ways.
It is not hard to set an agenda and call a meeting without the SM being involved, to then pass a resolution to request the removal of the unauthorized structure and to pursue the matter through mediation and CTTT if the owner of the shed does not capitulate. It will take time to understand what the process is but it is a worthwhile activity if an SP has a dubious SM.
The EC should also take JTs advice and get rid of this guy.
Go to your library and borrow NSW Strata and Community Schemes Management and the Law. After reading that book you will most likely know more than your SM. You will definitely know how to hold a meeting and pass the resolution to take action over the shed, you will most definitely learn how to get rid of your manager.
In my SP there is the concept that volunteers will do just about everything.
I'll give you an example; just last week one owner complained on the chalk board about the potholes in our 10km of internal roads and how one person cannot fix them all – a scribbled cry for help if you will.
The response from the roads co-ordinator was to get together a pothole workday. The idea is a collective of owners go out and fill trailers with gravel from our internal quarry and then drive around the SP filling potholes. (We do pay a significant amount in levies for roadworks but there is still an expectation that owners will do roadworks.)
Some people in my SP are openly ridiculed for not “participating” in a way that others want them to participate. If someone “complains” to the EC about common property needing repair or maintenance then the response is usually fix it yourself.
We have a significant amounts of assets and property that require constant maintenance. The “right people” get paid for their work while others are expected to do it for free. There are even people who do significant work for free but still get ridiculed because it is not work that makes the EC look good.
There are those who want everything for free and those who are happy to pay to get things done via their levies. There is a division between the two that exists in many strata plans.
Ignore the petty people who make the comments.
It sounds like you are getting the run around by your strata manager (SM).
Sure the Act says:
36 Requisition for motion to be included on agenda for general meeting
(1) Any person entitled to vote at a general meeting of an owners corporation on a motion that does not require a unanimous resolution may, by notice in writing served on the secretary of the executive committee, require inclusion in the agenda of the next general meeting of the owners corporation of a motion set out in the notice and the secretary must comply with the notice.
But your SM is getting very picky if requiring this because if the SM is preparing and distributing the agenda then the SM is doing the role of the secretary, permission for this would be in the agreement, and serving the notice of your motion on the SM is serving it on “the secretary” if the SM is engaged to be the secretary. It is a function of the Secretary to give EGM notices, so if the SM is acting as the Secretary and giving the notices then giving the motion to the SM should be adequate. I think you are getting mucked around.
It sounds like there has been an addition to the common property without OC approval. The EC could send the person responsible a letter requesting the shed be removed or the EC will commence action through mediation and then through the CTTT if necessary. Is there a motion to approve the shed on the agenda?
Do not forget the EC does not need the SMs permission to take action and that the SM is subordinate to the EC. If you have the support of the EC then the EC can take action if it decides it wants to.
I think you know that nothing new can be added to the agenda once the meeting notice is served (with due notice).
What to do; I think you also know that depends on what is brought up, passed and actioned. As we are all too aware CTTT are not going to automatically invalidate something just because process was not followed.
Just sit back, enjoy the show and hope you get the big levy increase that means you can help others pack .
You could reply to the email with parts of the SSMA which make it clear new items are for the next agenda, not the upcoming AGM. Schedule 2 clauses 35 and 36 covers it, it is simple to read and it is not quantum physics, so if the Chairperson still allows any new motions at the meeting then he/she does so with complete disregard for the SSMA.
I sometimes wonder why strata even has rules given most of them can be so easily ignored with little fear of repercussion.
The idea of adding to the agenda 4 days before the meeting is wrong and there is little can be done to stop it if the EC wants to do it; you can only potentially deal with the after effects if they are genuinely detrimental.
Urban Spaceman said:
Who thinks that idea floated a few months ago about ‘Strata Police’, who could be mobilised to check into a situation like this, would be a good idea?
I tried to put a hypothetical post on this forum regarding how the strata police were deployed to a noisy swimming pool over run by uni students after dark … it was a simple and effective solution to the strata dweller’s problem if such a hypothetical ever became real.
It involved strata police being dispatched to the location, running checks on the lands data base to see a by-law did exist and issuing on the spot notices to comply to the offenders.
Strata police … definitely have their uses and i for one think they should be made real, even if only on a trial basis to see how effective or problematic the idea is.
david18xx said:
But with the new laws coming in about the compulsory enforcement of by-laws, one can argue that the letter of the by-law be enforced (or CTTT enforced) which goes further than the Regulation.
The regulation states – Restricting the playing of loud musical instruments and sound systems that disturb neighbours after 10 pm Sunday to Thursday, rather than after 12 midnight.
The fact that it disturbs neighbours at all (and at any time) would be in the by-laws.
Hi David,
I think you will find that by-laws are the bottom rung as far as enforceable rules go. That is to say by-laws are subordinate to just just about everything else, including regulations.
For example an OC cannot pass a by-law or adopt a by-law that infringes on anything in the Strata Schemes Management Regulation; just as some strata by-laws cannot infringe on some other state regulation. Imagine if by-laws could over ride regulations; take a look at the SSMR; see anything you do not like then just pass a by-law to make the regulation “obsolete”.
s43 SSMA (4) A by-law has no force or effect to the extent that it is inconsistent with this or any other Act or law.
If the idea is that any noise that disturbs any neighbor becomes a breach of an enforceable by-law then the whole thing just becomes unworkable.
I live in a large land strata development where some people do not like the sound of lawn mowers, brush cutters, chainsaws etc etc. This leads to people throwing rocks all over other peoples lots, throwing empty bottles on lawns, ring up the neighbor and screaming abuse at their wife and kids.
Sure we have the usual, standard, compulsory if you like, by-law about noise but i recently invited the Secretary to include with the EC minutes an extract from Protection of the Environment Operations (Noise Control) Regulation 2008.
The Secretary wished to contend that our noise by-law was relevant (i.e. the State Regulation took as back seat to it) yet in over 20 years the EC has never once sent a person a notice to comply for too much noise for using any of the devices covered under the Regulation.
The EC declined to include the extract or even even mention the hours of use and specific equipment under the regulation so as to preserve the pretence that the by-law is the be all and end all of noise control in the SP – which it is not.
We have had similar issues with the use of power generators until the late hours of the night. The by-law again takes a back seat to higher laws.
If my neighbor wants to mow his lawn or chainsaw some fire wood at 7:30 pm on a weekday then that is the way it goes as long as he stops before 8pm. I know this is not exactly what this topic is about but it shows that you can make noise in some SPs.
The Chair Man said:
……… To explain the exclamation marks, our opponent was (still is) a professional strata manager with multi-decade experience who hired a strata lawyer (!) to file the CTTT complaint….
My SP would benefit from a degree of management but it is impossible to convince the owners of that and CTTT often do not use s162 when it is actually necessary
I'm curious. If this opponent was and still is a professional strata manager with multi decade experience then what is his interest in having the place put under management if it is not to benefit the owners?
Is there something we are not being told?
Jimmy T says; “Nominated voting – where your proxy form has a yes or no option for each item on the agenda – seems more democratic but it undermines a major function of the AGM: discussion of the issues. How can the vote of someone who hasn’t heard arguments for and against a motion be as valuable as someone who has sat through a debate?”
That is an interesting point. Think of it in terms of a local government election, a State election or a Federal election. How many punters go in blind without having shown an interest in any debate, I,d guess the majority. Is the major function of the AGM discussion or is the major function of the AGM resolution; I vote (by postal vote) it is resolution by discussion and of the two, discussion and resolution, only resolution is a must have.
Jimmy goes on to say: “The postal vote might be encouraged but only if arguments for and against the items on the agenda are sent out with it.”
I often wonder why the arguments for and against are needed for postal votes. I feel people can make up their own mind in the case of postal votes and if they want more information then they can always contact other people. Perhaps those proposing motions can put a case for the motion but who gets to present the negative argument?
I do not think AGMs should be events dominated by sales pitches like some Federal election; if people care they will make inquiries. A lot of owners in my SP do not read and consider the agenda of the AGM prior to the meeting. They often show up on the day and go with the flow.
One option from the open forum was mandatory voting in person or in writing (postal), no proxies, and fines if one does not show up to vote, or mail in their vote.
There are concerns that can be expressed with both nominated voting and postal voting but both are better than the current situation.
Urban Spaceman said:
I say 'no tramp', but wouldn't installing one require a Special Resolution at a General Meeting anyway?
I'm with the spaceman, the trampoline is adding something to the common property – needs a special resolution and if the OC is going to bother with a SR motion then it might as well be for special privilege and all the fun that would come with that.
Trampoline on common property without any resolutions- not a good idea if anyone has ever watched Funniest Home Videos.
Hi Peter C,
What you have going is, strictly speaking, not what the Act requires but as you point out good decisions are being made, your grounds coordinator is in a good position to make the most of the small resources made available to her and your EC is ready to step in if things get off track.
You are 100% right that there is a lot more going on here in my SP. In our case the sub committee (subbie) now comes with its own Treasurer and the project in question, the Hall, still has the best part of $60-100k to be spent. You can be sure the subbie will be involved in overseeing some or all of those funds if they can.
Once the EC in this OC get away with something that they should not be doing then they just keep going and it escalates. My EC is happy to cross lines and just keep on going if that is what they want to do.
It is interesting that our Landcare group still goes to the EC for their money and approvals which involves less money and less controversy than the Hall subbie being let loose with OC money.
Regrettably good decisions and responsible, unbiased, actions are not common enough in our OC to overlook something like letting a subbie loose with OC money.
In your case i would have the EC note what is going on is a little removed from what the Act requires but i would also have the EC note it is a low risk matter. As you point out your EC would step in if poor decisions were made or budgets blown, that would not be the case here.
In 2009/10 the EC of our large strata plan allowed the best part of 25K to be spent on the Hall when it only had 16K in the budget for the type of work done, the work was general construction, the main beneficiary was the same person who will administer the $3K. It does not bode well.
I am glad you have a subbie of one who is responsible and dedicated enough to do some good work and that you also have an EC prepared to step in if anything funny starts going on. It sounds like your SP is in a good situation. The point of this string of posts is that subbies are advisory; if they cross the line into decision making and/or monetary management then the EC/OC needs to consider where the subbie is going because the sub-committee has crossed a line.