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Edited version of private ruling
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Ruling
Subject: body corporate income
Question
Is the income derived from the public car park assessable income of the body corporate?
Answer
No.
Relevant facts and circumstances
The body corporate is registered in a particular state under the Body Corporate and Community Management Act 1997.
The body corporate comprises residential lots and a public parking facility contained within a significant portion of the common property. The car park generates income which is applied against the levies contributed by the proprietors. The expenses relevant to the car park are a liability of the body corporate.
Reasons for decision
Common property is that part of a strata plan not comprised in any proprietor's lot and would include a car park that is open and available to the public for a fee. The ownership of the common property in state X is vested in the proprietors as tenants in common in proportions equal to their lot entitlements. Whilst the ownership of the common property varies from state to state, the administration, control and management of that property is vested by all states in the body corporate in its own right.
For income tax purposes a body corporate is included in the definition of a company by virtue of section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997).
Income derived from fees charged to members of the public for the use of a car park situated on common property is included in the assessable income of the individual proprietors. This is because subsection 6-5(4) of the ITAA 1997 would apply to include those fees in the assessable income of each proprietor as their levies or contributions to the body corporate are reduced by the net rental income derived.
Distributions to the proprietors in the form of reduced levies or contributions therefore form part of each proprietor's assessable income. This is considered to be so even where the State strata title legislation prevents a proprietor from ever taking physical receipt (other than on winding-up) of the moneys, and where the moneys are paid directly into one of the body corporate funds.