Re: AGM Questions

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15/07/2013 at 1:28 am #19007
Jimmy-T
Keymaster

    I have just read and tried to understand the Tax Commissioner’s statement attached to Peter C’s posting below (thanks, Pete).

    The key to why some Owners Corps would not put money into interest earning accounts lies, I think, in the passage replicated here:

    21. The practice of granting exemption from lodging returns where all the income derived by the body corporate is mutual in nature, i.e., consists solely of proprietors’ levies or contributions, will be continued. In cases where income is derived from non-mutual sources, i.e., interest and dividends from invested funds, fees from non-proprietors for access to books etc; a return is required to be furnished.

     

    It’s not the tax on the interest that’s the issue as much as the cost of preparing tax returns.  If all the Owners Corp’s income is “mutual” – it’s only coming in to pay bills so it’s not really income – then the Owner’s Corp doesn’t have to prepare and submit a tax return.

    If you start earning interest, then you do have to get your accountants to prepare a tax return. The question then is, does the amount you make in interest exceed the cost of preparing an annual tax return.  I reckon that would be a line-ball decision, especially for smaller Owners Corps.

     

    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.