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Tax Return
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Romel
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01/08/2018 - 9:51 pm
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I am the elected Treasurer/Secretary in a small block of 8 units. Our strata plan is 4 years old and we use a strata manager for our accounts and advice. For the first three years we had zero income for tax purposes. This past year we have some bank interest.

I told the Strata Manager that I would do the tax return but he insists that we use his tax agent. He says that he is our public officer and that he is legally liable, even if I do the return, so he cannot take that risk. There is nothing in our strata agency agreement to support this.

The ATO won’t talk to me about our particular strata plan as the Strata Manager is the registered contact. If we didn’t have a Strata Manager, then I could do the return.

Can you advise whether he can legally insist on doing the return or whether, since we employ him, I can insist on doing it?

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Jimmy-T
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02/08/2018 - 11:18 am
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If there is nothing in the contract to that effect, I think you may be correct in saying that you can do the tax return – provided you are the elected treasurer.

Have a look at sections 23 and 24 of the Act (below) wich say nothing about tax returns but do define who can do what in regard to finances.

Also, ask your strata manager how much they plan to charge for organising their tax agent to do the returns.  If it’s a small figure you may as well let it go.

23   What are the functions of the treasurer of an owners corporation?

(1)  The functions of a treasurer of an owners corporation include the following:

(a)  to notify owners of any contributions levied in accordance with this Act,

(b)  to receive, acknowledge, bank and account for any money paid to the owners corporation,

(c)  to prepare any certificate applied for under Division 4 of Part 5 of Chapter 3,

(d)  to keep the accounting records and prepare the financial statements.

(2)  The treasurer of an owners corporation may delegate the exercise of any of the treasurer’s functions (other than this power of delegation) to another member of the executive committee if:

(a)  the delegation is specifically approved by the executive committee of the owners corporation, and

(b)  the executive committee specifically approves of the function being delegated to that member of the executive committee, and

(c)  the delegation is subject to such limitations as to time or otherwise as the executive committee requires.

(3)  While a delegate is acting in accordance with the terms of such a delegation, the delegate is taken to be the treasurer of the owners corporation.

(4)  The executive committee of an owners corporation may, by a notice in writing served on the treasurer of the owners corporation, order the treasurer not to exercise any of the treasurer’s functions that are specified in the notice unless the treasurer does so jointly with another person so specified.

24   Who can exercise functions relating to the finances and accounts of the owners corporation?

A person must not exercise any of the functions of an owners corporation or the treasurer of an owners corporation relating to the receipt or expenditure of, or the accounting for, money of the owners corporation or the keeping of the books of account of the owners corporation unless the person is:

(a)  a member of the owners corporation or of the executive committee and the treasurer of the owners corporation or of the executive committee, or

(b)  a strata managing agent who is empowered to exercise that function, or

(c)  a person with whom the treasurer of the owners corporation is required by an order of the executive committee to exercise that function jointly, and who is enabling the treasurer to comply with the order, or

(d)  a member of CPA Australia, or a member of the Institute of Chartered Accountants in Australia, authorised by the owners corporation to exercise the function, or

(d1)  a member of the Institute of Public Accountants authorised by the owners corporation to exercise the function, or

(e)  during the initial period only—a person authorised by the original owner to exercise the function.

Maximum penalty: 5 penalty units.
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Cosmo
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02/08/2018 - 12:55 pm
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Hi Romei, in my view what a load of codswallop you are being fed!  All in the purposes of getting commissions. I don’t know how much interest your OC earn or what the Strata’s manager is going to charge for tax preparation but if all they earn is interest filling out a tax return is so easy. 

Re being public officier: Have the OC or the EC on behalf of the strata write to the ATO and change your public officer for tax purposes.  The other alternative after getting permission from the EC or OC is just lodge the return with you nominated as public officer.  The ATO will update their records.

The ATO will have a PRN (payment reference number) for your strata the Strata Manager may already have it.  If the SM won’t give it to you it will be on any notice of assessment issued by the ATO or after being appointed and listed (for ATO purposes) as public office write to the ATO and ask for the strata PRN.  Once you have a PRN you can pay electronically.  

For tax purposes an OC is treated as a company and the ATO has a return for the OC.  A paper copy of which can be ordered over the phone.  As it is blank you don’t have to be the public officer.

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Sir Humphrey
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02/08/2018 - 6:18 pm
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Why do you want to do the tax return? When I was treasurer of an owners corporation, I was very happy for the managing agent to do all  the day to day handling of the accounts and tax matters and to confine myself to just satisfying myself periodically that all was in order. 

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Cosmo
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03/08/2018 - 8:30 am
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Sir Humphrey said
Why do you want to do the tax return?   

One word …. MONEY!  Let’s say interest earn’t was $200 and the charge for preparing tax return is $200.  To many small OCs that it is money better spent elsewhere.  And it is not hard

It is the same reason many OCs self manage.  Our small OC self manages.  We considered hiring a SM but worked out it would double our strata fees, all for administrative duties.  We decided the money was better spent on maintenance.

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Sir Humphrey
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03/08/2018 - 3:10 pm
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Ah! OK. That makes more sense. I thought you were wanting to do something you had already paid the strata manager to do. 

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strataact
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04/08/2018 - 2:27 pm
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Yes  tax returns for our Unit plan in the ACT often seem to wipe out any small gain we get from interest.  A Strata plan is a Company for tax purposes, so most accountants prepare a comany tax return, and charge accordingly.  

I have tried to get our strata manager and Comitte to lodge the ATO provided short strata return form (Search for Strata Tax return on the ATO website) which is usabe if your strata plan has simpe tax affairs – such as only income from interest. To my thinking it would be maybe 15 minutes work for the treasurer to complete and post it in.  But I have not managed to convince the rest of the committee to take this approach. 

So we have a tax return eery year where the accountant cost deduction almost exactly matches the amount of interest earned.   

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Romel
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08/08/2018 - 10:48 pm
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Thanks for your comments.

 

Our Strata Manager does charge a very reasonable fee but that is not my issue.

 

The instructions for the Strata Title Body Corporate Tax Return, state, in the very first paragraph: “If your body corporate only derives amounts that are subject to the principal of mutuality, then you do not need to lodge a tax return”. Our Strata Manager and his tax agent have lodged a zero tax return for three years, so, as I see it, they have provided and charged us for a service which we do not need.

This year when we have only bank interest income, the tax agent fee will certainly be more than our interest. The effort in doing such a return is minimal, maybe 15 mins, as strataact says, when you have the form.

I have used the ATO Chat Line on the web and have screen shots of their answers, which although not definitive, do seem to support my case. We also passed a motion at our AGM last week authorising me to do the return (that was on the advice of Fair Trading).

Thanks for the info on the PRN, Cosmo, I’ll certainly pursue that.

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