Private ruling: Mutual income for owners corporation
Date of advice: 29 October 2021
Published: January 2022
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 August 20XX

Ruling: Q1: Is the income derived from members of the Owners Corporation under the agreement considered mutual income and not assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. The income derived from members under an agreement for extra Units of Liability is considered as mutual income under Taxation Ruling TR 2015/3 Income tax: matters relating to strata title bodies constituted under strata title legislation.

Relevant facts and circumstances: The Owners Corporation has XXX lots and XX,XXX Units of liability (UoL) on the registered Plan of Subdivision. There is one lot (Lot SX) registered in the Plan of Subdivision which only records one UoL. Currently the lot owner (Lot SX) has built four lodges, with another two lodges being built in the near future. To make it more equal for all lot owners, all members have addressed the equity of UoL held by this one lot owner. A financial proposal has been put together for lot owner (Lot SX) to pay an extra amount as follows: • From XXXX 20XX, an amount that equates to the fees payable for XXX UoL. • When the two new lodges are built an amount that equates to the fees payable for XX UoL. The payment for the extra UoL for lot owner (Lot SX) will be allocated to Administration and Maintenance. The agreement will terminate or cease for any reason: • a Sub-division is approved which puts in place a formal lot liability; • Land Victoria approves a lot liability with the unanimous consent of the Owners Corporation; and/or • by mutual agreement between the owners of the lot and the Owners Corporation.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5