5.1.2.3 Approval of the annual budget and levies | Owners Corporation Network

5.1.2.3 Approval of the annual budget and levies

The budget needs to be approved by the owners corporation at the annual general meeting which gives the executive committee the authority to spend. Once approved the default position in NSW is that the executive committee needs to stick to the budget (i.e. they cannot go over 10% on any line item except in an emergency). Most owners corporations vote to waive the 10% rule or else they will get very bogged down in due process especially if spending is slightly out of sync year on year. Even when this rule is waived, there remains an obligation not to spend during the year more than the total expenses budgeted.

Relevant NSW Legislation: Strata Schemes Management Act (1996)

Section 23: What are the functions of the treasurer of an owners corporation?

Section 68: What money can be paid out of the administrative fund?

Section 70: What money is to be paid into the sinking fund?

Section 71: What money can be paid out of the sinking fund?

Section 75 and 75 (3): Estimates to be prepared of contributions to administrative and sinking funds

Section 75A: Owners corporation to prepare 10-year sinking fund plans

Section 76: Owners corporation to set levy for contributions to administrative and sinking funds

Section 78: Manner of levying contributions

Section 79: Interest and discounts on contributions

Section 80A: Limit on spending by executive committees of large strata schemes - are not permitted to spend more than 10% above the budgeted amount for any item (unless the owners corporation lifts the restriction by a resolution)