A strata manager can still be legally liable for the tax affairs of a strata company if they are listed as the public officer... even if they no longer manage the property!
This article explains the importance of having a proper resignation procedure when ceasing the management of a property for which you act as public officer:
When a strata manager hands over management of a property, there is a real risk that they could become what we might call a "zombie public officer" — someone who remains listed as the public officer of a strata company long after they have ceased to manage it. This situation arises when the Australian Taxation Office (ATO) records are not promptly updated, leaving the former manager responsible for the strata company’s tax obligations and receiving unwanted contact from the ATO. To avoid this scenario, it’s very important for outgoing strata managers to take deliberate steps to formerly resign the position and do their best to ensure that a new public officer is duly appointed.
Understanding the Role of a Public Officer
The public officer serves as the official representative of a strata company in its dealings with the ATO. This person is responsible for managing the company’s tax obligations, including submitting returns and responding to ATO inquiries. The role is legally significant, as section 252 of the Income Tax Assessment Act 1936 mandates that every company must appoint a public officer who is identifiable by their personal Tax File Number (TFN), and/or personal address and date of birth.
If a strata manager fails to formally resign as public officer when handing over management, they remain legally responsible for the strata company’s tax obligations into the future. This means that even after stepping away from management duties, the ATO will continue to view them as the point of contact, holding them accountable for any compliance issues that arise.
Even if a manager does properly resign, there is still a practical burden if the new management fails to update the ATO with the appointment of a new public officer. While the resigned public officer should be legally protected in this scenario, they may continue to receive ATO correspondence and have to deal with the hassle of proving their resignation. This ongoing communication can be a source of unnecessary stress and administrative work, particularly when you no longer have access to the necessary records or technical authority to resolve issues. In addition, if the strata company does not comply with their tax obligations under the new management, your reputation as a fit and proper person to act for your other clients may be brought into question via the ATO's system checks.
Suggested Steps to Avoid Becoming a Zombie Public Officer:
- Submit a Resignation Letter and Withdraw Consent to Act: As part of your handover process, include a formal resignation letter that explicitly states your resignation and withdrawal of consent to act as the public officer. This letter should be addressed to the new strata manager, clearly stating the effective date of your resignation and informing them of the strata's responsibilities under the law.
- Notify the Strata Council Directly: Beyond notifying the new manager, ensure that the strata council also receives a copy of your resignation letter. This extra step increases the likelihood that the council will take the necessary actions to appoint a new public officer and update the ATO records accordingly.
- Assist with the Transition By Signing Necessary Forms: To facilitate the appointment of a new public officer, offer to sign a Change of Registration Details form (NAT 2943) once the new manager has completed it with the details of the new public officer. (Remember that this form must be ordered as a physical copy, and that your signature needs to be dated before the effective date of your official resignation as public officer).
Quick Takes:
- If a strata manager doesn’t formally resign as public officer during handover, they remain legally responsible for the strata company’s tax obligations and could be held liable for compliance issues.
- Even after resigning, if the new manager fails to update the ATO, the former manager may still receive ATO correspondence and need to address issues, despite no longer being responsible.
- To minimise risk, outgoing managers should submit a resignation letter, notify both the new manager and strata council, and offer to sign an ATO Change of Registration Details form prepared by the incoming manager.
If you're a current Strata Manager partner with Ascend, feel free to Contact Us for a ready to go resignation letter template to incorporate into your handover process.
Links:
- Section 252 of the ITAA 1936
- Update Your Details (ATO Link)
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.
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