INCOME TAX RETURNS FOR STRATA CORPORATIONS

Most, if not all, strata corporations earn interest from their bank accounts and contingency reserve funds. Banks will issue T-5 forms to the strata corporation. Strata Councils often ask if they should file an income tax return, even though this may be the only additional income they receive.

It is our understanding that, although it is generally a formality and that no taxes need be paid in most cases, you should file a return to keep in the good books of the taxmen.

We recommend that you complete a T-2 short form and send it in, attaching the T-5 slips and your balance sheet for the fiscal year. To read instructions and download a ‘T-2 Short Form’ in Portable Document Format you can use this URL:

http://www.cra-arc.gc.ca/tax/business/topics/corporations/return/menu-e.html.

Click on the ‘Pages’ tab and click each page to get details. A magnifier icon is available in the toolbar. Page 1 has the instructions and an explanation of who must complete the form. Pages 5 and 6 are the pages to be completed for the ‘T-2 Short Form’. Pages 2, 3 and 4 are used to document business activity and will not usually apply to a strata corporation.

A Business Number is required. It may also be used when involved with Workers Compensation transactions. In case you do not have a Business Number (BN) you can request one at this URL:

http://www.cra-arc.gc.ca/E/pbg/tf/rc1/rc1-fill-05e.pdf

This documentation should be sufficient unless the corporation has significant earnings from other sources. At the simplest, these may be found on the balance sheet and attached to the return. If your financial activities are more complicated you may need a tax expert to prepare your return.