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If the Owners Corporation generates an income (such as from the receipt of renting out a car parking space), then there are likely to be taxation implications that the other owners might not like.
As I understand it (and this is still and area I am very hazy about), paying money to the OC’s account will trigger tax provisions about this money being “non-mutual income”, which the Tax Office regards as money that reduces all lot owners’ levies, divided according to their unit entitlements. So all the owners should declare this non-mutual income in their personal tax returns each year.
If some owners are getting a pension, then they should declare this income there, also, which may cause problems. Plus you need to factor in the administration of these rents, and how the OC will handle anyone who fails to pay the amount owing – these amounts are not levies, so need to be managed separately. Of course, most strata buildings have some additional income (eg, from replacing key/fobs) which is ignored, although I think strata managers tend to hold his in a trust account, rather than distribute this to the owners, to avoid reducing their levy payments, and so, avoid them having to include this in their tax returns.
Also, some strata buildings, especially older ones, will have visitors parking bays that are not specified in the DA (this is the case with our 50 yo building), which should be checked, and if this is the case, then the OC might have some more options.
For example, a one-off sale (or exclusive use agreement) of a parking bay, means a single tax declaration in the year it occurs, for all the owners if they agree, and is less complex administratively.
- This reply was modified 5 months, 1 week ago by .