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July 10, 2014

Income tax and Strata Corporations with Sections

Income tax and Strata Corporations with Sections

Under Section 191 the Strata Property Act a strata corporation may create Sections but only for the specific purposes described in this section. This purpose does not include income tax filing.

A Section is created when appropriate bylaws for the creation and administration of the Section is deposited in the Land Title Office (s.192.a) along with any resolutions to designate limited common property for the use of strata lots in a section (s.192.b).

Once the bylaws creating a section have been filed in the Land Title Office, a section is created the name “Section [number of section] of [name of strata corporation]” (s.193.4).

While the Land Title Office may establish a general index for the section (s.193.5), the Canada Revenue Agency, in their Interpretation Bulletin 2001-0424091E5 (E) does not recognize a Section as being a separate legal entity from the strata corporation. A strata corporation and all sections are a single legal entity and as such, the strata corporation is required to file one income tax return which would include the information from all sections of the strata corporation. A Section would therefore not be assigned a separate Business Number by the CRA.

It is important for the strata council to ensure all income is reported, including that income earned by each section to the CRA.

Some strata corporation sections, particularly those with smaller numbers of strata lots, may be self-managed; however, increasingly many strata corporations with sections have more than one property management company who serve the often differing interests that occur between the strata council and the executive council for each section.

If your strata council or section executive is considering retaining their own strata management company in the Metro Vancouver area, contact us to discuss a solution that will meet your need.

C & C Property Group Ltd. provides property management services to strata corporations in the Metro Vancouver area.



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