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Commercial Law – Taxing Times for foreign owners

By Natalie Gosper, a Solicitor in our Commercial Law team.

In 2016 and continuing in early 2017, we saw many changes to legislation affecting both vendors and purchasers of property. These changes largely came about due to the new Commonwealth Reporting Requirements (CRR).

The CRR places requirements on States and Territories to report transfers of freehold or leasehold interests in land.  The information collected is used for data matching by the ATO to ensure compliance with Commonwealth tax laws and for the establishment of the National Register of Foreign Ownership of Land Titles.

For NSW property transactions, purchasers comply with the CRR by completing a Purchaser/Transferee Declaration.   The form, required by OSR, must be completed for every property transaction requiring a stamp duty notation (including Transfers of Land and Surrenders or Transfers of Leases).

Some of the recent legislative changes affecting foreign owners include:

NSW Land Tax surcharge

A land tax surcharge of 0.75% (i.e. over and above the usual rate of land tax) applies to foreign owners of residential real estate commencing in the 2017 land tax year.
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Strata committee powers and obligations

The new strata legislation imposes a high standard of care and diligence on the strata committee when it carries out its functions, such that individual strata committee members can be personally liable for their actions. However there are powers which are afforded to the strata committee, which include orders to dispose of abandoned goods left on common property, the power to make orders for payment of contributions (which operates as an enforceable judgment), and the power to dismiss applications for mediation if frivolous or lacking substance. To learn more about your rights as members of a strata committee please do not hesitate to contact one of our qualified strata lawyers in Sydney. Accessing executive committee legal advice from an experienced Owners Corporation Solicitor will ensure that every executive committee member is aware of their obligations and responsibilities.

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Financial Management

Money from the Owners Corporation enforcing penalties will be paid into the strata scheme administrative fund, while amounts paid from the building bond are to be paid to the capital works fund. The 10 year capital works plan (sinking fund) is to be reviewed every 5 years. Owners Corporation legal advice can be obtained from one of our experienced Owners Corporation solicitor Sydney.

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Strata Management

Transitional existing agency agreements will terminate on the later of 3 years after appointment or 6 months now that the new legislation has commenced. Existing agency agreements will be assigned or transferred. To understand more about agency agreements in respect of strata schemes please speak with a strata lawyer today.

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Process of strata renewal plans

The process of renewing a strata plan involves the committee considering a proposal within 30 days of a request and a general meeting convened in order to consider the plan (and either reject or approve such plan). A special resolution is then made, which is non-binding. A strata renewal committee is appointed by the Owners Corporation (a maximum of 8) and notice is provided to all owners.  For executive committee issues throughout this process and for other executive committee legal advice please contact us to speak with a strata lawyer today.

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Collective sale or redevelopment

Strata renewal plans can include either collective sales based on the value of unit entitlements, or redevelopment which cannot be less than the compensation value determined by the Land Acquisition (Just Terms Compensation) Act 1987 (section 55). For more information about collective sale or renewal of strata schemes please contact our experienced strata lawyer. Matthews Folbigg has specialist strata lawyers that are able to provide owners corporation legal advice.

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Repairs to new strata buildings

We are often approached for advice on issues regarding repairs to new strata buildings. Under the new legislation, building bonds will be lodged with the Chief Executive, which equate to 2% of the contract price of the building work. This covers defective work for residential and mixed use schemes for work done in a way that breaches statutory warranties under the Home Building Act, but does not apply to buildings less than 3 stories in height. Please contact us to speak with a qualified strata defects lawyer, particularly for strata defects legal advice Parramatta.

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Effect of new Legislation

The new legislation governing strata schemes in NSW, being the Strata Schemes Management Act 2015 (NSW) and the Strata Schemes Development Act 2015 (NSW) has been introduced to remove red tape and, on balance, should improve the nature of the “Owners Corporation”. If you require owners corporation legal advice or encounter executive committee issues requiring executive committee legal advice please contact us to speak with a qualified owners corporation solicitor Sydney.