Private ruling: Deductions against income from common property
Published: October 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are you eligible to claim deductions for body corporate fees, council rates or mortgage interest against assessable income earned from common property? | A1: No.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 8-1 and | Income Tax Assessment Act 1997 Subsection 6-5(4).

Reasons for decision: Summary: 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.

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. | 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.