A Strata Plan can be a non-profit company for GST purposes and a for-profit company for tax purposes.
Taxation Ruling TR 2015/D1 is very clear;
"20. A strata title body is a company for income tax purposes."
"22. A strata title body will not be taxed as a non-profit company even if it includes non-profit clauses in its by-laws."
Being a for-profit company denies a Plan the non-profit tax free threshold of $416 (which would have been handy for small plans) but does not carry over into GST considerations.
GST Ruling 2012/2 is not so clear, but it can be seen that it is easily possible for a Plan to be a non-profit company for GST purposes. The benefit being a compulsory GST registration threshold of $150,000 instead of $75,000.
"74...The term 'non-profit body' is not defined for the purposes of the GST Act so takes its ordinary meaning in the context in which it appears. A body is a non-profit body if, by operation of law (for example, a statute governing a body's activities) or by its constituent documents, the body is prevented from distributing its profits or assets amongst its members while the body is functional and on its winding-up."
"75. Where it is clear from the objects, policy statements, history activities and proposed future directions of the body that there will be no distributions to members, we accept that the non-profit test has been satisfied."
But perhaps the biggest and least known tax issue in strata is income from common property and how it is declarable in the owners tax return, not the Plan's tax return. Going back to Taxation Ruling TR 2015/D1 it states:
"27. Where the common property is vested in the proprietors or in the strata title body as agent for the proprietors, the income derived from the use of the property constitutes assessable income of the individual proprietors."
That's potentially a several year problem for some unit owners only just finding out about this rule, where they were not advised of the amounts to declare by their tax return lodging strata agent.
If the tax agent lodging the Plan's return doesn't advise the owners of their declarable amounts how would owners be able to determine the figure for themselves? I would imagine the necessary letters to owners would constitute legitimate additional tax fees.
Common property income is most often rental fees from the leasing of common property such as a common parking space. It also includes capital gains on the sale of common property. Not very common but not unheard of either.
Although TR 2015/D1 was made in 2015 it replaced IT 2505 which had a clause similar to clause 27 and has existed since 2009.
