Body Corporates established under the current BCCM Act might have financial years different to the standard financial year in Australia ending on 30 June each year. This can cause inconvenience and additional costs, especially in relation to lodging ATO tax returns, budgeting, bookkeeping, and other financial reporting and accounting work.
A Body Corporate’s financial year begins from the establishment of the scheme until the end of the month, immediately before the anniversary of the establishment of the scheme. In other words, if a scheme was established on 1 September 2019, its financial year will be from 1 September 2019 to 30 August 2020.
Of course, Body Corporates may be established in any month of the year. This means that only Body Corporates established in July of any year will have a financial year that lines up with the standard financial year ending on 30 June of each year.
It doesn’t have to be this way. A Body Corporate may seek to change its financial year if its current financial year is an issue. If the Body Corporate gives its consent, it may apply with the Commissioner’s Office for adjudication to seek an order to change the financial year pursuant to Section 283 of the BCCM Act. Such an application falls within the legislative dispute resolution provisions in the BCCM Act.
Such an order can only be made if it would be just and equitable to do so. An example of where this may be just and equitable is if the Body Corporate wishes to change its financial year to align with the standard financial year ending on 30 June of each year. In this case, a Body Corporate that has a financial year ending 30 August may seek that its financial year ends on 30 June.
This was the case in Brighton on Broadwater Sundale South 2 [2019] QBCCMCmr 435. Here the Adjudicator found it just and equitable to change the Body Corporate’s financial year to end on 30 June because it was the only building in the development to have a different financial year.
If it would save the Body Corporate time and money, it is worth seeking legal advice as to whether it would be appropriate to change the Body Corporate’s financial year.
Disclaimer: This article is intended as general information only and should not be relied upon as legal advice. For specific legal advice please contact us here.