Rulings, IDs & Determinations - Guidance for strata title units07-Apr-2015
TR 2015/D1: Income tax: income tax matters relating to bodies corporate constituted under strata title legislation
This draft ruling addresses a range of tax issues that affect a body corporate constituted under strata title legislation and the owners of a lot that would be held under that legislation.
The ruling confirms that a strata title body is treated as a company for income tax purposes. However, it will not be treated as a non-profit company, even if it includes non-profit clauses in its by-laws.
The ruling provides guidance on the application of the mutuality principle to contributions made by proprietors to the strata title body. The ATO confirms that just because an amount is received from a proprietor does not necessarily mean it will be subject to the mutuality principle.
For example, if a proprietor pays their strata levies late and is required to pay interest to the strata title body this should be subject to the mutuality principle and should not be taxable. However, if a proprietor breaches the by-laws and is required to pay a penalty this would not be subject to the mutuality principle and should be taxable.
The ATO also confirms its views on the treatment of a range of other issues, such as where the strata title body charges proprietors and tenants for the use of assets held by the strata title body such as washing machines and car parking spaces. The ATO also provides guidance on the deductibility of expenses including capital works.
Several older TDs (TD 93/7, TD 93/73, TD 96/22 and IT 2505) have been withdrawn following the introduction of the draft ruling.
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