Setting a budget

For each financial year, the body corporate must adopt a budget for the administrative fund and the sinking fund.


For the admin fund, the budget must contain estimates of what money will be needed to meet the cost of maintaining common property, the cost of insurance, and other recurring expenditure for the year.


For the sinking fund, the budget must raise reasonable capital to meet spending for at least 10 years (including the current financial year) for capital expenditure, non-recurrent spending, and periodic replacement of things.



Both of these budgets must also set an amount to be raised from lot owners via contribution. If many hundreds of thousands of dollars will be needed over the next 10 years just for the sinking fund, then it must be decided how these contributions are to be levied. Will they be levied higher in the first few years to try and reach that amount faster? Will it be spread out if expenditure isn’t anticipated for a while? These are all factors that must be considered at every AGM.





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.

BRISBANE 

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