Having a TFN and ABN in place protects a strata property from unnecessary withholding tax and potential administrative headaches down the road. This article explains why setting up both identifiers early is a smart move for every strata building.
In strata management, it's easy to focus solely on the maintenance of common property and the running of meetings. But behind every strata company sits a legal entity—one that needs to be properly set up with the correct financial registrations to avoid future problems.
Two key identifiers all strata companies should have are a Tax File Number (TFN) and an Australian Business Number (ABN). Both play an important role in protecting the scheme’s financial health and flexibility.
Why a TFN Is A Non-Negotiable
A TFN becomes a required necessity the moment a strata company earns assessable income.
This could be:
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Status certificate fees collected during the sale of a lot
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Interest earned on reserve fund term deposits.
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Minor income from community initiatives, rebates, or grants.
Whether the assessable income is small or fully offset by expenses is irrelevant — earning even $1 of income triggers the legal requirement for a company to prepare a tax return. Without a TFN, lodging that return becomes problematic, and banks will automatically withhold tax at 47% on interest income.
Why an ABN is a Smart Add-On
While the TFN is essential, obtaining an ABN at the same time is a smart move.
An ABN allows your strata company to:
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Facilitates the registration for other taxes (eg: Goods & Services Tax (GST), PAYG WH (Tax withheld from employees or FBT (Fringe Benefits Tax)) if circumstances so dictate
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Avoid 47% being withheld from business payments received from other entities (under the PAYG WH requirements)
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Present clean, complete paperwork for suppliers and insurers who may request an ABN
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Simplify future transactions if the building chooses to lease rooftop space, participate in rebate schemes, or earn other non-levy income; and
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Make future transitions between strata managers smoother by having a complete, recognised financial profile
Having an ABN does not mean the company is registered for GST, nor does it trigger any extra reporting or costs in and of itself. It's simply an optional add-on to the TFN application process. If you’re already completing a TFN application, it makes practical sense to add an ABN at the same time— it's low effort, incurs no addtional costs and can save time later on.
Setting Things Up Properly from the Start
At Ascend, we recommend every strata company has both a TFN and ABN registered early. It’s a simple safeguard that ensures the scheme can act quickly, adapt to new opportunities, and avoid common compliance issues. We actively monitor the portfolios of our partners to ensure every property is fully up to date in this regard.
Quick Takes:
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A TFN is needed to lodge a tax return and avoid 47% withholding on bank interest.
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An ABN prevents withholding tax on payments received and simplifies dealing with third parties.
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Applying for both a TFN and ABN early is a smart, strategic move.
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Contrary to myth, an ABN registration does not creates unnecessary obligations in and of itself.
If you have any queries in, please reach out to our admin team.
Links:
- Do We Have To Do A Tax Return for Status Certificate Fees?
- New Management Advce Form (ABN/TFN Updates & Compliance Check)
The above content is of a general nature and should not be relied upon as professional advice. Ascend encourages readers to seek advice from suitably qualified professionals in relation to their specific circumstances and not to rely solely on the information provided above. Please contact our office for more information.
(C) 2025 Ascend Strata Pty Ltd