Does a Body Corporate have to pay tax

Body Corporate Taxation

Taxation issues for a Body Corporate can be surprisingly complicated.  This is because taxation issues may need to be assessed from up to three different perspectives.  These are

  • Mutual Income of the Body Corporate
  • Body Corporate as a Public Company
  • ‘Proprietors as Beneficiaries’ or ‘Proprietors as Tenants in Common’ or ‘Proprietors as Principals’
ATO

The Australian Taxation Office has finalised their ruling on how to assess taxation for Bodies Corporate.  You can read the ruling by googling ‘Taxation Ruling TR 2015/3’.  Below is an extract from that ruling that may be applicable for many Bodies Corporate –

Generally, where the only income derived by a strata title body is mutual in nature, that is, consists solely of proprietors’ levies or contributions, there is no assessable income, so the strata title body is not required to lodge a return.  In cases where income is derived from non-mutual sources, that is, interest and dividends from invested funds, fees from non-proprietors for access to books etcetera; a return is usually required to be furnished

Bank Accounts

For most small Bodies Corporate, the amount of interest earned from a Bank account is likely to be less than the cost of having an Accountant prepare a tax return.  An option that we recommend is to use a Banking business account that pays no interest but also has no bank charges.  If there is substantial sinking funds, consider the nett amount the Body Corporate might earn after deducting any tax agent fees from the interest earned since the submission of a taxation return will now be required.  If the nett amount is substantial, consider opening a separate high interest account.

DIY-BC

Tracsafe’s DIY-BC self managed software service does not generate taxation documentation for your Body Corporate.  However, it can help by providing reports of income and expenditure for any period which can then be used by qualified tax professionals to complete and submit taxation forms.

Disclaimer

This information has not been prepared by an taxation practitioner.  You should not rely on it as taxation advice.

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