| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1012464175506
Ruling
Subject: CGT - disposal of common property
Question 1
Is the capital gain assessable to the Strata Plan?
Answer
No
This ruling applies for the following periods:
Year ended 30 June 2013
The scheme commenced on:
1 July 2012
Relevant facts and circumstances
You are a Strata Plan registered in NSW.
You sold a number of parking lots, and have made a capital gain on this sale of common property.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 102-5(1)
Reasons for decision
Detailed reasoning
Taxation ruling TR 97/4 sets out at paragraphs 24 and 25 the Commissioner's view on the ownership of strata title units and ownership of common property:
Ownership of stratum units
24. Stratum units are owned both legally and, unless held on trust, beneficially by each individual stratum unit owner.
Ownership of common property
25. The legal ownership of common property varies under different State and Territory Acts. However, beneficial ownership is universally vested in the stratum unit owners:
… (ii) in New South Wales the ownership is vested in the body corporate as agent for the proprietors as tenants in common in proportions equal to their lot entitlements (Strata Titles Act 1973 (NSW))
The treatment of common property is discussed in paragraph 17 of Taxation Ruling IT 2505, as follows:
17. The assessability of moneys received in respect of the common property, for example, fees derived from the letting of shops situated on the ground floor of a block of apartments where the ground floor forms part of the common property, varies according to the relevant State strata title legislation. In those States where the common property is vested in the proprietors, viz. Queensland, Victoria, Tasmania, Western Australia, or vested in the body corporate as agent for the proprietors, viz. New South Wales, the income derived from the use of the property constitutes assessable income of the individual proprietors. This is considered to be so 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's funds. In these cases, proprietors 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.
In your circumstances, while you are governed by strata title legislation in your State, you can sell part of the common property on behalf of the owners of that common property, the individual unit owners. Therefore, you are merely an agent for the principals, that is, the unit owners, and when you sell the common property CGT Event A1 has occurred and is assessable to the unit owners in accordance with IT 2505. The Commissioner's view is that it is the unit owners who have disposed of the asset which is part of the common property and who have made a capital gain from that sale. Therefore, the capital gain from the sale of the parking lots is assessable to the unit owners. The unit owners may be entitled to the 50% discount on their capital gain, subject to the conditions of this discount, and based on their individual ownership circumstances.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
