Quick links
- Canada Revenue Agency: Income Tax Guide to the Non-Profit Organization (NPO) Information Return
- Canada Revenue Agency: T1044 Non-Profit Organization (NPO) Information Return
- BC Strata Housing: Preparing a financial statement
- BC Strata Housing: Financial best practices for stratas
Do strata corporations have to pay tax?
Most residential strata corporations are essentially non-taxable corporations. Generally stratas qualify as non-profit organizations (NPOs) under paragraph 149(1)(l) of the Income Tax Act because they are usually operated for a purpose other than profit. Interest earned on bank accounts, the contingency reserve fund, GICs, etc is generally non-taxable. The interest earned becomes part of those funds.
A strata may have to report revenue and pay tax if it operates a commercial business such as a hotel or golf course. The strata corporation could also jeopardize its non-taxable status if it is generating revenue such as renting a clubhouse to the public (non-owners) or leasing roof space for communication relay stations. See the article Income of Strata Corporations: How Not To Lose Tax-Exempt Status in the November 2015 issue of VISOA’s Bulletin magazine. The author, Jonathan Wright, is a lawyer specializing in tax, tax-exempt entities, and corporate law.
Non-residential and mixed-use stratas should consult the Canada Revenue Agency (CRA) and a tax consultant to determine their tax obligations.
Are strata corporations required to file annual income tax returns?
Paragraph 150 of the Income Tax Act requires all corporations, including strata corporations, to file a T2 income tax return each year, even if they may be exempt from paying tax. If the assets of the strata corporation (such as gym equipment, lobby furniture, funds in bank accounts, and the contingency reserve fund) exceed $200,000 or meet certain other criteria, it must also file a Form T1044 with its T2.
Take care to use the correct code for the type of NPO (non-profit organization). A strata corporation is NPO Code 10 “Residential condominium corporation”.
If you need help after reading the Income Tax Guide to the Non-Profit Organization (NPO) Information Return, call the CRA at 1-800-959-5525.
Does the strata need a business number?
To file a T2, a strata corporation needs a business number (BN) from the CRA. If your strata doesn’t have a BN yet, use the CRA pdf form Request for a Business Number and Certain Program Accounts (form RC-1 E (23)). Don’t use the Business Registration Online method as it does not have fields for strata corporations!
Government, banking, and other forms can be confusing as they often have categories and fields for corporations and societies but not strata corporations. If the CRA asks for incorporation documents let them know it’s a strata corporation not a business corporation. A strata corporation is established at the time the strata plan is deposited in a Land Title Office. The legal document for a strata corporation is the strata plan, not incorporation documents. Learn more by reading What is a strata corporation? and What is a strata plan?
Is GST payable on strata fees and special levies?
Since residential stratas generally qualify as NPOs under the Income Tax Act, they aren’t required to collect and remit GST.
Depending on the amount collected during the year, GST might be applicable to strata fees for commercial strata lots, and strata lots in “strata hotels” used for short-term rental accommodation. The strata corporation may have to collect and remit GST if it is operating a commercial business such as a golf course or marina. Non-residential and mixed-use stratas should consult the CRA and a tax consultant to determine their tax obligations.
Do stratas have to hire a bookkeeper or accountant?
There is no requirement for a strata corporation to hire a bookkeeper or accountant however many stratas will hire one to help with filing the tax return.
How long does the strata have to keep tax returns?
Strata Property Act (SPA) s. 35 says the strata corporation must retain copies of tax returns (if any). Regulation 4.1 (3) says they must be kept for at least 6 years. This includes copies of the T2, T1044, and any supporting documents. Learn more about financial statements.
Can owners request copies of tax returns?
Under SPA s. 36, certain persons can inspect or request copies of the records referred to in section 35. This means that any owner, or person authorized by an owner, can request certain financial records including income tax returns. Learn more about the records a strata corporation is required to keep, who can make requests, the timelines, and fees.
Member-only resources
Log in to your account to access the following resources. *Indicates a resource for corporate members only.
- Sample financial statements*
- Worksheet for creating a budget and calculating strata fees by unit entitlement (Excel)*
- Worksheet for calculating a special levy by unit entitlement (Excel)*
- Preparing for your strata AGM (slides)*
- Preparing for your strata AGM (webinar Q&A)*
