Strata Collecting Extra Fee to Fix Common Property

justwii on 21/08/2023 - 18:55

Hi, my strata is collecting extra fee from every unit to fix some common property issue as it requires more than what we accumulated in the fund. I checked ATO website, but am quite confused whether I can claim it back in full in this year tax return.

On one hand it said special charge can only be claimed back over 40 years at 2.5% per year as if it is a capital work. But on the other, this is a repair so that units are still in rentable condition. And to complicate the matter more, strata is not collecting an one off fee, it is asking us to pay it back like a loan repayment and is going to span across a few years. I wonder if I can "prepaid" it now by dumping the full amount into the strata account and let it deduct from there, so that I can claim back the full amount now.

Any help is appreciated!

Financial

Comments

  • AndyC1 on 21/08/2023 - 19:36

    You should read up on strata living as you are using all the wrong terminology.
    Also you need an accountant to help you out as you also are using the wrong terminology when you are talking about deductions.

    • lucyrenegade on 21/08/2023 - 22:51

      Could you point them to any resources where they could learn about the correct terminology?

  • MITM on 21/08/2023 - 20:24

    So it's an annual or monthly repair/maintenance levy ? Then just claim this amount each Fin Year as such.

    • justwii on 21/08/2023 - 20:37

      Its a special levy billing us monthly

  • MS Paint on 21/08/2023 - 20:34

    To clarify, this is an investment property you are talking about?

    • justwii on 21/08/2023 - 20:37

      For sure. Otherwise there is no rental income.

    • justwii on 21/08/2023 - 20:52

      Yeah, very confused.

      I just quote ATO here:

      What you can't claim
      Certain body corporate fees may not be deductible in the financial year you incur them, such as payments to a:
      special purpose fund, which is established to cover a specified, generally significant expense that is not covered by ongoing contributions to a general-purpose sinking fund
      special purpose fund to pay for a one-off unexpected major capital expense
      special contribution to pay for major capital expenses out of the general-purpose sinking fund.
      These payments cover the cost of capital improvements or repairs of a capital nature and are not immediately deductible. You may be able to claim a capital works deduction for your share of the expense once the work is completed and the cost has been charged to the fund.

      But also

      Repairs
      If you fix something that's damaged or broken, it's a repair. For example, fixing a leaking tap, or part of the fence damaged in the storm. Amounts for repairs and maintenance are claimed fully in the year the expense is paid.

      • Malik Nasser on 21/08/2023 - 20:54

        Note, however, that repairs are generally partial.

        Replacing a faulty filter in a dishwasher may be a repair; replacing the dishwasher generally is not.

        • justwii on 21/08/2023 - 20:58

          Thanks, I also got that one.

          Strata is fixing the damaged common property but charged via this special charge/levy.

          • CheapskateQueen on 21/08/2023 - 22:27

            @justwii: you need to explain what the "repair" is.

            are they painting a wall or building a staircase?

            • justwii on 21/08/2023 - 23:16

              @CheapskateQueen: Nah, its building subsidence. But I don't know why it is relevant.

              • CheapskateQueen on 22/08/2023 - 07:42
                +1

                @justwii: because it's the character of the repair that determines whether it's a repair (deducible) or improvement (capital). - its actually the key relevant question

                not sure if this helps - see if it is similar enough to your situation, noting that you cannot rely on an edited private ruling as a defence if the ATO says you got it wrong https://www.ato.gov.au/law/view/view.htm?docid=EV/1051744006…

                • justwii on 22/08/2023 - 11:03
                  -1

                  @CheapskateQueen: Thank you. But I am not sure the confusion comes from repair vs improvement.

                  To me the confusion comes from repair vs special levy, as I quoted above

                  These payments cover the cost of capital improvements or repairs of a capital nature and are not immediately deductible.

                  • CheapskateQueen on 22/08/2023 - 19:03

                    @justwii: mate, go pay for advice then cos you don't know what you're talking about.

                    whether it's a special levy or the cost of the works is inbuilt into the ordinary levies is irrelevant

              • Gnilgorf on 22/08/2023 - 07:44
                +1

                @justwii: If its building subsidence, without any further information, one can only assume its related to structural / foundation works.

                It would be altering the building, which is a construction expenditure and falls under Capital works.

                Refer to ATO's PDF. 2nd page would be of interest to you.

                • justwii on 22/08/2023 - 11:10

                  @Gnilgorf: See how that is so unclear. So far I can only see cracks/gaps in brickworks being patched up, damaged pathway repave and waterproofing redo. Even with what you said something else related to foundation works, they all seem to me "restoration to their original state" and thats repairing, not upgrading.

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