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  • #45364
    Avatargeric26
    Flatchatter

    We are setting up a Maintenance Fund (one year old, 42 units, Victoria).

    Although interest rates now are low, over a 10 year period they still do add to the total. How is this normally handled, through the Property Manager or by separate bank accounts?

    • This topic was modified 1 week ago by .
    #45684
    Jimmy-TJimmy-T
    Keymaster

    Traditionally, strata managers have avoided putting maintenance funds into interest-earning accounts because that would attract tax which would cost more to calculate and submit than you’d earned.

    Strata managers are required by law to have separate accounts for each Owners Corpration but that doesn’t mean separate bank accounts – just a record of the amounts that they hold in trust for each owners corp, and for what purposes.

    If you are self-managed then you probably need to ask whether the minimal interest you might earn in a commercial account would be more than offset by tax and acounting implications.

    #46000
    Avatarstrataact
    Flatchatter

    I’d suggest the accounting costs are the potential killer.  Our small ACT plan (19 units) has our sinking fund of in the order of 10 of thousands in a couple of term deposits.

    Tax rate will be max 30% company rate .  I have wanted our plan to self prepare our tax return using the ATO short form strata return here

    https://www.ato.gov.au/Forms/Strata-title-body-corporate-tax-return-and-instructions-2019/

    I estimate it would take about 15 minutes to fill in the details and send it in.  Unfortunately I cannot convince our committee to do this so we are left to pay the SM/accountant several hundred dollars to prepare a standard company tax return.  So as said above, paying this, plus tax only leaves us a very small gain.

    I would have thought that a large strata scheme with large sinking fund would definetly want to have it invested.  And if the scheme was of a size to have other income (rental of common property spaces to commercial entities etc)  or be of a size to be required to be GST registered and so needing to do periodic Business Activity Statements to ATO the accountant fees for annual returns may already be needed.

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