Lookupstrata, Sydney, Australia – May 29, 2025 – As tax time approaches, strata owners and committees across Australia have been warned to be wary of the tax implications of strata financial decisions.

Leading strata finance specialists told a recent national Lookupstrata webinar that widespread misunderstanding of this complex area can undermine owners' return on investment and lead to substantial, unexpected tax bills from the Australian Taxation Office (ATO).

"It was surprising to hear that the first time lot owners may become aware of these significant tax implications was through a large tax bill from the ATO," said Nikki Jovicic, Lookupstrata MD and webinar moderator.

"The aim of these webinars is to highlight and educate owners and committee members on crucial information so they can make more informed financial decisions."

Paul Morton, CEO of Lannock Strata Finance and Rod Laws, Director at Tinworth and Co, stressed that both individual owners and strata committees must carefully factor in tax consequences when making financial decisions. They believe many committees, while acting in the best interests of the scheme, may be operating in ignorance of the intricacies of tax rules.

Understanding Tax Obligations

"Residential owners often don't consider tax in their strata matters, unlike investor owners who might hand it over to their accountant and forget about it," explained Paul Morton.

"However, both groups stand to miss out on potential benefits or face unforeseen liabilities if they don't understand how strata decisions directly impact their individual tax obligations."

Rod Laws said, “decisions on levies and capital works can have profound tax implications for individual owners.”

"For instance, investor owners can claim capital works deductions, but crucially, this is only permissible when the owners corporation actually spends the funds, not necessarily when the levy is paid," Laws stated.

The Costly Consequences of Unawareness

A striking scenario highlighted by Paul and Rod involved the development of common property, such as building penthouse apartments on the roof. If a scheme of 124 units spent $20 million on construction and sold them for

$50 million, the $30 million profit could leave individual owners facing a tax bill on their $220,000 share.

This taxable income would typically not qualify for the capital gains tax 50% discount because the activity is considered a business enterprise, not a passive investment. The sale could also be subject to GST, further reducing the net proceeds.

Experts said that failing to correctly account for such transactions can lead to severe penalties from the ATO, including fines up to 250% of the evaded tax (which lot owners and committee members are most likely unaware of) and, in extreme cases, even jail time for serious non- compliance.

Seeking Specialist Strata Tax Advice

The experts stressed that the way an owners corporation structures its finances – whether capital works funds, special levies or external borrowing – directly affects tax deductions for individual owners on their levies.

With tax time on the horizon, owners and committees should pay attention to the tax implications of their financial decisions and seek independent financial and tax advice from a specialist strata tax agent who is specifically aware of and understands how tax rules work in strata.

This will help make informed decisions about the crucial after-tax impact on investments and personal finances.

"It's crucial for owners to ask the right questions of their tax advisors regarding levy structures and the financial decisions of the owners corporation," added Laws.

The webinar underscored that tax considerations should be a fundamental and integrated part of every significant financial decision made within a strata scheme.

This proactive approach, guided by specialist advice, is essential to protect owners' financial interests and ensure full compliance with ATO regulations.

To listen to the full webinar and gain deeper insights, watch the complete webinar video available on this page.

Media Contact

For any further details please contact:

Julie Schoneveld - Media Manager, Lookupstrata

Contact: 0435 939 491

Email: media@lookupstrata.com.au

About Lookupstrata

Since 2008, Lookupstrata has solidified its position as Australia's leading independent online strata resource hub, delivering unparalleled and easily accessible information for strata owners, committee members, strata professionals, and service providers nationwide. For over 16 years, We have championed unrestricted access to unbiased, thoroughly researched strata information, empowering the entire strata community with the knowledge to confidently navigate the intricacies of strata living and make well-informed decisions.

Lannock Strata Finance

Since 2004, Lannock Strata Finance, founded by CEO Paul Morton, has been Australia's leading strata lender. We are experts in strata and capital works funding, partnering with the NSW and ACT Governments on critical remediation programs like Project Remediate.

Tinworth & Co

Spanning 30 years, Tinworth & Co is a highly credible leader in strata audits across Australia. We are a dedicated specialist team, headed by Rod Laws since 1993 (a Member of the Institute of Chartered Accountants ANZ), consistently delivering transparent and accountable services tailored to the specific accounting and taxation needs of strata committees and owners.