15 Mar Your complete guide to owners corporation levies
Each quarter, your owners corporation levy notice rolls in. But have you ever stopped to ask where the money actually goes – and how the amount is determined? To answer questions just like these, we’ve created this helpful guide.
What is an owners corporation levy notice?
An owners corporation levynotice is a periodic tax invoice from the owners corporation to all lot owners.
Distributed at least 28 days before the due date, it details levies along with any arrears or prepayments at the issue date.
Where does my money go?
The funds are kept in the owners corporation account. They’re then used to pay everyday expenses to cover the administrative and maintenance needs of the property.
At Turnbull Cook, we don’t keep the money or decide how it’s spent. Our role is to administer the funds according to your Owners Corporation Committee instructions. The budget set at your last AGM should provide details on those expenses.
How are levies determined?
The cost of your levies will vary depending on the lot entitlement allocated to your individual lot.
These entitlements are based on the registered plan of subdivision – which determine each lot’s share of the approved budgeted expenses. Levies can also increase or decrease from year to year as the needs of your owners corporation change.
The budget from your AGM will provide details on how your owners corporation expects to use these levies. But to get technical, owners corporation levies are calculated as follows:
Levies raised per lot = total approved budgeted expenses x individual lot entitlement (%).
How is the budget determined?
Each year, your owners corporation committee and manager review the property’s financial requirements to determine a budget for admin and maintenance costs. This budget is then presented for approval at the AGM.
Once approved, the levy contributions are set and distributed via an owners corporation levy notice.
Why have I received more than one levy notice?
There may be instances where your car park or storage cage is listed as a separate lot. As these lots have a separate entitlement, you will receive a separate owners corporation levy notice – depending on the structure of your owners corporation.
Your property may also be affected by multiple owners corporations. This is where different sections of the building contribute towards different expenses.
What are special levies?
Sometimes, special levies are required to cover expenses outside of the budget. These funds are raised by the owners corporation manager under instruction from the committee.
What is a Budget Adjustment Levy?
As levies are based on the approved budget of the owners corporation, new levy contributions can’t be introduced until they’re approved. Due to this delay, levies within the current levy year will stay at the same rate.
Once the new rate is implemented, any difference between the amount already raised and the amount due to be raised will be adjusted within the remaining levies.
Owners Corporations can choose to raise a once-off Budget Adjustment Levy for the difference – or smooth the difference over remaining levy periods. We can advise you on your best option.
Who is liable for past levies?
The registered proprietor of the lot is liable for outstanding levies and charges. Any person entitled to receive rents and profits from that lot are liable as well.
A debt from outstanding levies, charges, contributions or amounts owing to the owners corporation stays with the lot and does not follow the debtor. This puts the lot’s debt into the hands of the new proprietor.
Why has my levy payment not been allocated between my lots?
If you have more than one lot, you need to pay each invoice separately using the unique DEFT reference provided on your levy notice.
As the system uses the DEFT number to automatically pay money into the account, any amount using the same DEFT number will go to the same lot.