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Hi,I am a newbie at strata and have been reading all the posts.
I am certain if this is the correct place to post this.
I have purchased an unit wherein strata undertook works to the common property items (i.e windows, sliding door locks, new lighting in common area etc).
I receieved a copy of the contractors bill and have noted that they lumped all works together in one fee.
Should not the new windows, locks and lighting be seperately costed so that these items can be depreciated or does this not occur in strata?
Your responses are appreciated.
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I know I claimed depreciation when I owned an investment unit (carpet, kitchen, bathroom etc) for taxation purposes. I don't know that it applies to strata.
Chilliblue,
As the OC only pays tax on interest earnt on the funds that they hold, the OC can not claim depreciation….(the OC doesn’t pay much in the way of tax)
I wonder, though, if individual owners can claim a share of depreciation since, I think, if the OC makes any income (from the rental of common property or suchlike) that is supposed to be apportioned back to the individual owners as taxable income.
This was the case a few years ago and I haven't heard anywhere that it has changed so that might be a way of offsetting taxes.
I hasten to add, I haven't heard of any building that actually does this but if your block, say, rents roof space to telecom towers, owners may be up for a tax bill.
And when you think about it, claiming depreciation could open up a whole can of taxation worms. be careful what you wish for …
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.
when you get a depreciation report completed by a quantity surveyor there is a section known as the 'division 43' for original plant and equipment and common property which you can claim.. I would suggest contact a quantity surveyor to confirm in regard to new items (google will show you a few main ones who will be happy to advise) however I expect that as these are paid for from your admin or sinking fund and you are already offsetting your admin and sinking fund costs against your income and claiming again would be double dipping…
Jimmy, yes you are right, the ATO sees income earnt by an OC in the way of rental income, or sale of common property, assesible income in the hands of the individual owners (see tax ruling IT2505). I know of several buildings that have come under this situation.
I got this off an ATO flyer I downloaded last year.
Strata Title Body Corporate
Instructions and tax return 2010
Strata title bodies corporate are treated as public companies. If your strata title body corporate has made a capital gain or a capital loss from a transaction in respect of all or part of the common property, the gain or loss is not included in the tax return for the body corporate. Each proprietor or unit owner must include their share of the capital gain or loss in their own tax return based on their proportion of the lot entitlements.My SP claims exception by mutuality in our audit reports but at present there appears to be thousands of dollars of income every year but it does not appear that tax is paid on it. In fact over $10000 of non mutual income appears on the latest audit; last year it was closer to $20000.
The 2011 version of the flyer and tax form is here
It is quite interesting what the OC pays tax on and what the OC is supposed to tell owners is their share of taxable income which the owners are supposed to declare.
My self-managed SP has never informed owners of the taxable income they should be declaring that comes from non mutual income that the OC receives. Without doubt we have non mutual income that nobody is ever told what there share is.IT2505 can be found here and it is rather long and seems a little complex.
It says things like; “In those States where the common property is vested in the proprietors, viz. Queensland, Victoria, Tasmania, Western Australia, or vested in the body corporate as agent for the proprietors, viz. New South Wales, the income derived from the use of the property constitutes assessable income of the individual proprietors….”
It is worth a read if you are a Secretary or Treasurer in a self-managed complex
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