Body Corporate Fees, Accounts, Payment, Budget and More!
Paying your owners corporation feesLove it or hate it, we trust you’ll agree, that the management of your collective finances is pivotal to the success through efficiencies, of your body corporate. Whether you’re an owner-occupier or an investor, a well maintained, well run building, not only creates a great place to stay, live and enjoy coming home to, it ultimately, protects your investment!
A key function of your body corporate is to repair and maintain the property that you all collectively own and share use of. This may include areas such as gardens, foyers and hallways through to communal libraries, gymnasiums and pools, as well as ensuring adequate lighting in these areas, maintenance of equipment and even upkeep of plant and machinery needed to service buildings in the instance of central hot water systems, heating, ventilation and cooling. Exactly what is needed is unique to your complex. That’s why your contribution to decision making in your body corporate is so beneficial.
Your Ace Body Corporate Manager is here to support you through support of the process and guidance on your obligations. Read on to find out what you need to know about a body corporate’s financial journey.
Payments to your Body Corporate:
Ace Body Corporate Management uses Macquarie Bank DEFT payment services for all its bodies corporate. If you have an enquiry about your fee notice, please contact your manager directly. Their contact details will be at the top of the fee notice. Otherwise, enter the property address into our Find a Manager search function.
How to Pay Body Corporate Fees:
- Mail the slip on the Fee Notice with your cheque to:
DEFT Payment Systems, GPO Box 2174, MELBOURNE VIC 3001
- Present this page to make your payment by cash, cheque or EFTPOS at any post office.
- Please call 1300 301 090 to make your payment using a Mastercard, Visa, American Express, Diners Card
- Call your bank, credit union or building society to make this payment from your cheque or savings account.
- Please click on the picture below to pay your account online.
- Macquarie Bank DEFT Payment System
Body Corporate Accounts and BudgetFor your confidence each body corporate managed by Ace Body Corporate Management has an individual bank account established in its own name. It’s under the delegation of the body corporate members, that the BC manager remains sole signatory to the account.
As part of your account management obligations, your BC Manager raises fees, issues fee notices and supports the debt recovery process. They also make payments out of the BC funds and provide financial statements to keep you and all members of your Body Corporate informed.
It is important however that you are aware, that it is you, as lot owners collectively that set the annual fees and that you recognise the importance of you remaining an active part of the decision making processes.
The main component of the budget is generally the insurance premium, which may cover such things as buildings, common area facilities and shared services, as well as public liability cover office bearers liability. Other body corporate expenses include your caretaking, grounds maintenance, body corporate manager’s fees as well as expenses attributable to shared service utilities (watering of the gardens, lighting of common areas), repairs, preventative maintenance through to routine maintenance of essential services, lifts, pools etc.
Your body corporate will vary to the extent of funds that accumulate in your account. Many operate on a small margin over the normal annual operating costs while others plan ahead and wisely choose to accumulate funds over time so that they’re prepared for major capital works as they arise, eg painting, replacement of gutters, fences and roofs etc. where the building forms part of the body corporate. If your body corporate is without sufficient funds, at the time a major un-budgeted expense is to be incurred, it may raise a once-off special levy to collect fees to pay for the necessary work.
It is the collective decision of lot owners, which sets the fees at each annual general meeting (AGM), as well as the frequency of payments towards the annual budget (eg annually, six monthly quarterly). The AGM is held close to the beginning of each financial year of the body corporate, so be sure to diarise the date as soon as known to make sure you can attend, participate and contribute to decisions. The budget to be set should include- the total amount required to maintain and manage your building, its services and facilities, as well as accommodate potential expenses to address timely concerns of the members. Once set, the agreed annual budget dictates the amount of body corporate funds to be accumulated that year, and in turn is calculated into the fees payable by each member. The amount contributed by each member is based on a table included in the plan, which reflects a % basis respectively of each lot in comparison to the plan as a whole. This table includes reference to "lot liability".
Other meetings may be held if required by members to address additional and unprojected needs of a body corporate, as they arise.
Example budget for a small body corporate with minimal common property to maintain Administrative Fund
10 Centre Road, Centreville. (8 units)
|Proposed||Last Year's Budget||Last Year's Actual|
|General Maintenance for common areas||$1,068.00||$1,068.00||$1,000.00|
|Lawns & Garden||$1,300.00||$1,200.00||$1,200.00|
|TOTAL ADMIN FUND||$7,419.00||$7,159.00||$7,196.00|
Sinking Fund or Maintenance Plans::Sinking funds, (or “Maintenance plans” or “reserve funds”) are a form of budgeting for major expenditures, projects or covering unexpected costs. The funds can be used towards painting, purchasing and installing new equipment, roof replacement. general refurbishments, repairs to common areas and major repairs. The aim of the fund is to cover long term maintenance of the property to ensure that it remains in a state of good order. Funds are raised in advance in anticipation of future expenditures, thereby reducing financial surprises and hardship.
Maintenance plans are important to proactively help plan for major forecasted expenditures. Then with issues being dealt with in a timely manner, the forecasting and funding reduces further complications of reactive funding. One example would be a building painting project that is postponed for consideration and then further postponed as levies are raised. By the time the project starts, severe paint deterioration has caused wood rotting which further increases the scope of work required, increases the cost of the project, and threatens property values and sales. Maintenance plans budget for total replacement of building components rather than estimating or considering maintenance or repairs. There are certain benefits to implementing one for your body corporate.
GST:For income tax purposes, an owners corporation is treated as a “public company” and must submit a return for any $1.00 of taxable income e.g. interest on investments. For GST purposes, an Owners Corporation is now considered a non-profit body and is not required to register for GST unless turnover is more than $150,000. If an Owners Corporation distributes income back to its members, it loses its non-profit status.
For income tax purposes, an owners corporation is treated as a “public company” and must submit a return for any $1.00 of taxable income e.g. interest on investments. A body corporate must register for GST if its turnover is greater than $75,000, however the threshold for registration increases if the body corporate’s turnover is less than $150,000 and there is no intent for it to distribute income back to its members. At such a time it loses its non-profit status.