| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012325687554
This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.
Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.
Ruling
Subject: Deductions against income from common property
Question
Are you eligible to claim deductions for body corporate fees, council rates or mortgage interest against assessable income earned from common property?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2012
The scheme commenced on
1 July 2011
Relevant facts
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are the owner/occupier of a strata unit for which you have received a share of the income from the rental of common property associated with your unit complex.
The only income you receive as a unit owner is the income generated from the common property.
You pay outgoings such as council rates, body corporate fees and maintenance in order to hold the property.
The rental of the common property is arranged by the Body Corporate manager who is an external consultant, with input from the Body Corporate committee.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 8-1 and
Income Tax Assessment Act 1997 Subsection 6-5(4).
Reasons for decision
Income Tax Ruling IT 2505 discusses bodies corporate constituted under strata title legislation.
The income derived from the use of the property constitutes assessable income of the individual proprietors (paragraph 17 IT 2505) even in those States where the 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. In these cases, proprietors are considered to receive a benefit in that the amount needed to be levied on the proprietors by the body corporate as contributions to the administrative or other fund would be reduced by the rental income applied directly to the fund.
Where a proprietor receives assessable income from income generated from the common property they are entitled to a deduction for any expenses that they incur which are directly related to the income from the common property.
Body corporate fees, council rates and mortgage interest are expenses related to the unit itself and are not directly related to the earning of the income from the common property. As the expenses are not directly related to the income generated from the common property they are not deductible.