One of the benefits of living in an Owners Corporation is that each Owner contributes to the future upkeep of the property. It is important as an Owner, to understand your Owners Corporation levies. In this article, we will share financial tips to help manage the financial responsibilities of your Owners Corporation.
What are the financial responsibilities of the Owners Corporation?
It is important that committees understand how to set budgets and levies, the different funds and insurance, and what to do if something goes wrong.
Your Owners Corporation must:
It is important to note that an Owners Corporation that has more than 100 lots or collects more than $200,000 in fees (known as a “prescribed Owners Corporation”) must, after the end of each financial year, have its financial statements audited and establish a maintenance fund.
Issuing fee notices
One of the most important financial obligations of the Owners Corporation is to set annual fees to cover administration, maintenance and repairs, insurance and other obligations of the Owners Corporation. Your Owners Corporation manager must send out fee notices in the prescribed form as well as final notices and will organise the follow-up of any debt arrears.
Financial record keeping responsibilities of an Owners Corporation
An Owners Corporation must keep financial records that cover all its income, expenditure, assets, and liabilities, record and explain all financial transactions for income tax and GST and provide fair and true reports of its financial situation.
An Owners Corporation that has an approved maintenance plan must also keep separate accounts and records for its maintenance fund.
Financial statements at Annual General Meetings
Your Owners Corporation must present its financial statements at each Annual General Meeting. Financial statements should give a summary of all transactions during the financial year. This includes:
- Assets and liabilities records
- Penalty interest charges
How are levies paid?
All fees levied by an Owners Corporation must be paid into a bank account of the manager or provider, or the Owners Corporation. The manager holds the money in trust for the Owners Corporation and must account separately for the money held for each Owners Corporation. If money is held in trust or for the benefit of another person, then general law duties arise, including:
- Inquiring into the terms and state of the trust
- Obeying the terms
- Not making a personal profit or advantage from the trust
- Accounting for and providing information on the trust
- Keeping accurate and up-to-date records
– Administering the trust personally
– Exercising reasonable care not to mix trust monies
– Acting impartially
To improve the value of your investment, it is imperative that you understand your financial responsibilities of your Owners Corporation. At SSKB, we help make the entire process of being part of an Owners Corporation as easy and seamless as possible for Lot Owners. Click here to make the switch to SSKB today.