Levy contributions are the primary source of income for Body Corporates. It is different from council rates, where rates set by the Council is resident contribution towards public infrastructure and services. Levy contribution is payable to the Body Corporate to fund all the necessary running of the body corporate; this means common power electricity, maintenance expenses and other amenities shared by all owners.
Levies are distributed each quarter, so within a financial year there are 4 quarterly payments payable by owners. The quarterly amount will be the portion each owner needs to contribute as per the unit entitlement.
There are commonly two type of funds payable by owners, Admin Fund and Sinking Fund. Admin Fund is setup to allow funds for the building’s day to day expenses, this could be in the form of repairs to the building or fire equipment replacement as set down in the budget for a period of twelve months. Sinking Fund on the other hand is to cover long term costs to the building, i.e. re-painting the building, or substantial works on building assets. Budget that is set for the current financial year will determine how much each owner’s levy will be for each quarter.
If there is a need to obtain further funding, a special levy can be raised with the direction of the Body Corporate. Generally a special levy will require a special resolution, with further requirements that may apply depending on which Act the Body Corporate is listed under. A special levy can be discussed and voted upon during a special general meeting. Once a motion for special levy is passed, contributions are calculated according to the entitlement and each owner will be required to pay in addition to their quarterly contributions.
Levy contributions work the same way as any other bills, notice is given to owners and payment is to be made before the due date, extra charges may be imposed for late payments depending on the arrears policy of the Body Corporate. This is no different than your water bills or power bills.
There are times where owners are under the impression that levy contributions are payable to the managing agent (e.g. North Management). Though management fees are listed as an expense item within the Body Corporate financial budget, each owner levy contribution pays a wide range of expenses including, but not limited to: insurance cover, building maintenance, common electricity, lift services, fire equipment services and management fees.