Tag Archives: strata

STRATA Master Accreditation Announcement

We are excited to announce that Rockend Technology, one of the leading technology providers of the strata and property industry in Australia and New Zealand have appointed Econ Strata & Real Estate Services with STRATA Master Certification, as of 1 March 2017.

Econ strata master combo

This certification is an acknowledgment of both STRATA Master expertise and the ability to deliver high quality training, consulting and comprehensive accounting services to the strata industry.

Our growing success is down to working alongside strata managers to understand the challenges they face in both running their business and managing the demands of owners and strata committees.

The challenges faced in business are generally not isolated to any one company, and Aylie Brutman now in her 25th year of strata continues to draw on her experience to assist managers to improve their business process, create efficiency, leaving more time to build relationships with owners and committees.

Our team of experienced professionals provide efficient and reliable services accessible 24/7 via our Client Portal; taking the pressure away from Strata Managers and giving them back time to spend on what they do best; managing people and their property.

We’ve done this before and we can do it for you. We get it done.

The Real cost of adding to your Owners Corporation

When I first started in strata 25 years ago there weren’t many urban renewal projects going on. In fact newly registered strata plan numbers were only in the 50,000’s.

With the recent NSW changes to the rules for collective sale, many Owners Corporations – who may not want to leave their homes entirely – have been sparked into thinking about adding to, or changing the existing buildings for the benefit of all owners.

They may be:

  • seeking to create more of a community than merely a vertical housing structure, or
  • they may be looking for monetary benefit without selling up and moving from their current home.

It would seem a building upgrade, or addition to create modern facilities, reducing the carbon footprint or generation of income for the lot owners is a reasonable option to consider.

It’s important to remember that there may be costs you haven’t considered when undertaking such projects


An Example

Let’s say the Owners Corporation is looking to add to the existing structure in order to make some money whilst the property market is booming. The owners have been throwing around the idea of converting an existing top floor plant room into an additional lot which can be sold and the proceeds returned to the owners. They don’t have the funds now, but they are looking at raising a special levy to fund the project.

The physical building works will include:

  • extending the lift shaft,
  • relocating the existing plant and equipment room; and
  • creating the new lot in the plan.

This newly formed lot could then be sold with the proceeds of the sale being returned to the owners.

So the owners create a sub committee to investigate the costs to complete the project. They have a fair idea of what the lot will sell for, but what is the cost?

Working out the Cost

A detailed project is created and they start breaking down all the expenses which will be incurred in the project. Quotes are requested, and estimates are collated for the cost of consultancy and application fees, project management and building costs.

Tax implications

The subcommittee must remember to consider the tax implications for both the Owners Corporation, and the lot owners individually. Tax is complex; there could be an unexpected tax liability or some deductions which were not considered when budgeting for the project. The subcommittee should take into account things such as:

  • Capital Gains Tax: construction and sale of the new lot for the Owners’ Corporation;
  •  GST: What are the implications for the Owners Corporation of undertaking the project?
  • Personal tax: What are the implications on the Lot Owners’ personal tax if a special levy is raised to fund the works? Would there be a difference to the Lot Owners if the funds were raised to the Administrative or Capital Works Fund for the project? What are the tax implications for Lot Owners once the proceeds are returned after the sale of the lot?

A Private Ruling

The subcommittee may want to recommend the owner’s corporation apply for a private ruling which is binding advice provided by the ATO that sets out how a tax law applies in relation to a specific scheme or circumstance. Of course there are professional costs associated with lodging the ruling.

What should you do?

There can often be significant financial benefit to individuals when undertaking these types of works, but remember to consider all tax implications.

At the Economos Group we are experienced tax advisors for all individuals, and businesses including Owners Corporations. We’ve done this before and we can do it for you. We get it done.