[jeff.f]

I might refer to the link here https://www.ato.gov.au/Business/Bus/Property-and-Construction-Industry-Partnership—issues-register—section-01—bodies-corporate-owners-corporations-and-strata-managers/? page=6#1.1.3_Do_bodies_corporate_make_taxable_supplies? where the ATO considers that Owners Corporations make taxable supplies for which admin and sinking fund levies are payable by the individual owners.

The definition of GST turnover in the GST Act includes all taxable and GST-free supplies made by the entity.  Hence – if levies raised by an Owners Corporation exceeds AUD75,000 in any 12 month period, there is an obligation for the OC to register for GST and charge GST on their levies.

Not the ideal outcome as I personally think that it creates an unnecessary GST burden on OCs.  In other jurisdictions, particularly in Europe, they are carved out of their VAT law.

I looked at this issue a few years ago when our Owners Corporation was first incorporated and I noticed that our strata manager had registered us for GST. I had a particular interest as in my day job, I work as a senior GST lawyer in a top tier accounting firm.  (However – please do not take this as the provision of tax or legal advice.)

It would be definitely be beneficial if the ATO could issue a simple fact sheet for strata organisations, especially given that many strata bodies do not have expertise in this area.

[jeff.f]

I stumbled upon this discussion and thought I would add my 2 cents.

This link to some ATO guidance will be useful for answering your question: https://www.ato.gov.au/printfriendly.aspx?url=/Business/Bus/Property-and-Construction-Industry-Partnership—issues-register—section-01—bodies-corporate-owners-corporations-and-strata-managers/#1.1.1

In brief, strata body corporates (or Owners Corporations) must be registered for GST if their turnover exceeds AUD75,000 in any 12 month period (NOT AUD150,000 as the ATO does not generally consider Owners Corporations to be not-for-profits).  

This means there will be an obligation to lodge quarterly business activity statements and charge GST on levies.  However, at the same time, your Owners Corporation will also now be able to claim any GST on costs (e.g. maintenance, contractors, electricity etc).  Your strata manager should be able to advise on how this should affect your budget.  

The fact that Owners Corps have been “dragged” into the GST net by the ATO’s interpretation is unfortunate and probably should have been excluded outright (this is the case in other jurisdictions with a value added tax or similar).  

Hope this and the link to the ATO website helps.

[jeff.f]

Our Committee is attempting to obtain a copy of the Strata Roll as they wish to dismiss the strata manager.  A verbal request was made, however, it was refused on the grounds that it would breach the Privacy Act.

This was followed up by written request from our Secretary citing s22 and s108 of the Act, to which no response has been provided.  

The strata management company (which is quite a large one based in Sydney) has become extremely uncooperative and unprofessional ever since they realised the Committee would be moving to dismiss them.

Is there anything we can do to obtain the Strata Roll in this circumstance?  It is a catch-22 as we cannot call an EGM unless we can get a copy of it.  

We are extremely frustrated at the moment and cannot believe a strata manager would act so unprofessionally.

[jeff.f]

That sounds really interesting – our EC is also looking at getting in a Building Manager.  So I gather that the Building Manager would have a work order system which would require the approval of the EC for each task.

This might seem like a silly question, but how does this practically work?  Would the EC have to hold a meeting every time a work order needs to be issued?  (In order to have proven that the EC has approved a work order).

I’d be very interested in understanding how this works practically on a day to day basis!

[jeff.f]

Thanks all for the advice!  We’ve already asked our cleaner to see if they could take on an extra ‘building manager’ type role – unfortunately they don’t have the capacity.

We received one quote from a small building management company – they have quoted to provide cleaning and gardening services too, I presume, to make it cost effective for them to take on this role.

I’d be interested in finding out how many strata plans actually use building managers and their experience with using one? 

Ours is a medium sized plan and only requires a building manager due to the lack of capacity of owners (including myself) to deal with issues onsite.  If I were retired or worked from home, it would be something I would pick up.

[jeff.f]

CBF – no, we’re not in a large strata plan with an onsite manager.  Our plan has circa 60 apartments and townhouses and is run with a very hands-off strata manager.

We’re just lucky enough to have a EC members who include retirees, those who work from home as well as a couple top tier lawyers who can quickly draft and manage correspondence (e.g. notices, warning letters, letters to property managers).

As a number of tenants are foreign students or new migrants, there was a big issue with educating residents when the strata plan began early last year.  We partly solved this by preparing a detailed “residents guide” which we’re now in the process of converting into a website, hopefully like the one we found here: http://www.cammeraysquare.com.au

One of our EC members also monitors apartments which are newly tenanted to ensure that the new residents receive a welcome letter enclosing a copy of the by-laws and residents guide.  The main real estate agent managing the majority of tenanted apartments also keeps a copy of this to provide to new tenants.

It’s quite a bit of work for the current EC members, but it saves us a hell of a lot on strata manager disbursements (especially in the early years when levies tend to increase exponentially) and ensures that we’re always on top of things. 

[jeff.f]

In our strata scheme (which is approximately 60% tenanted), we have adopted a procedure of posting notices on a nicely framed notice-board in the apartment lifts. 

By default, the notice is one which informs all residents of key duties required by the by-laws.  However, from time to time, we might place notices reminding residents of various things e.g.:

• monthly council kerbside garbage pickup this coming Thursday;
• electrician is attending to rectify issue on particular day, so there may be intermittent power outages;
• garage door malfunction – so please be aware of security issues in basement;
• garbage chute blocked again – please don’t shove pizza boxes down otherwise the culprit may be hung and shot.

We also issue a periodic newsletter which provides an update on various improvements and capital works performed by the Owners Corporation and allows to remind residents (tenants and owners) of current by-law issues (such as illegal garbage dumping etc). 

Where there are breaches of by-laws (usually by tenants who aren’t aware of their duties), we send them a polite letter informing them of their breach and the process for escalation to a notice-to-comply and fine where it continues.

Only where there are recalcitrant residents who continue to ignore repeated letters do we escalate this to their rental property manager.  We have good relationships with these property managers, so the issue usually gets resolved very promptly after that.

[jeff.f]

In our strata apartment/townhouse complex, we had an ongoing issue with the abuse of designated visitor parking spaces.  We resolved it at the last AGM by passing a By-Law in relation to Visitor Parking. 

Two lawyers on our Executive Committee drafted the By-Laws (they are tax lawyers, not strata lawyers, but nonetheless applied their drafting skills).  We’re happy to provide a copy of the By-Law below for others to use.

Since the passing of this By-Law, the whole visitor parking issue has gone away.

 

2. Visitor Parking

2.1 An Owner or Occupier must not park or stand, or allow to park or stand, any motor or other vehicle in the Visitor Parking Area except with the written approval of the Owners Corporation.

2.2 The Owners Corporation must not unreasonably withhold its approval to the parking or standing of a motor or other vehicle in the Visitor Parking Area under Special By-law 2.1.

2.3 Notwithstanding Special By-law 2.1, a Visitor may park a motor vehicle in the Visitor Parking Area for a period of not more than 12 hours at any one time.

2.4 An Owner or Occupier may apply to the Owners Corporation to request approval in writing that any Visitor be allowed to exceed the 12 hour period referred to in Special By-law 2.3.

2.5 Any determination or approval made by the Owners Corporation concerning the parking of any motor or other vehicle in the Visitor Parking Area is at the absolute discretion of the Owners Corporation and may incur a Parking Fee.

2.6 Where:

(a) an Owner or Occupier parks or stands a motor or other vehicle in the Visitor Parking Area without the written approval of the Owners Corporation; or

(b) the Visitor of an Owner or Occupier parks a motor vehicle in the Visitor Parking Area in excess of the 12 hour period referred to in Special By-law 2.3 without the prior written approval of the Owners Corporation,

the relevant Owner or Occupier will be deemed to have accepted to pay the Parking Fee to the Owners Corporation.

2.7 Any payment required by the Owners Corporation in accordance with this Special By-law 2 becomes due and payable to the Owners Corporation within 14 days of a decision of the Owners Corporation to require that payment.

 

Additional Definitions to be inserted into By-Law 1.1

Parking Fee means a fee of AUD 110 per 24 hour period;

Visitor means a bona fide guest or invitee of an Owner or Occupier;

Visitor Parking Area means any basement area of the Common Property designated for parking by Visitors and not comprising part of a Lot, but does not include the Carwash Bay.

[jeff.f]

Thanks for the replies.  I had our strata manager confirm whether the sign had been erected on Common Property.

His opinion was that it was actually Council Property, as it was just outside our fenceline.  On that basis, he will report this to Council to enforce themselves.

The real estate agent acting for the Owner was playing hardball and skirting around the rules – this is an even better outcome because it means that Council will enforce and recover costs, instead of us.

[jeff.f]

Thanks so much for the comments.  To clarify, the trees with overhanging trees are neither planted on Common Property or within an individual Lot.  They’re on a neighbour’s property – technically it would be their responsibility to trim overhanging tree branches. 

However, on the basis that our neighbour(s) won’t pay for that cost – whose responsibility would it be (the Owners Corporation, or the individual Lot owner)?

[Author]

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