Explaining your owners corporation levies



This is an article repost. Originally posted on 2018-04-06 and can be found on this link


As we close in on the end of yet another quarter of the financial years, lot owners everywhere are preparing for another round of Owners Corporation fees.


Some will have paid them before, some might be paying for the first time – but many still fail to appreciate what their money pays for.


Contrary to popular belief, the fees are not paid directly to your Strata Manager, but rather into your Owners Corporation’s bank account.


So, why do fees vary so wildly from building to building? Who sets the fees? What exactly do they pay for?


The below infographic gives a quick breakdown, while in the article below, Strata Plan takes a look at the anatomy of an Owners Corporation’s finances, from their budgets to fees and beyond.


Your owners corporation fees



Before we get into how the Owners Corporation’s finances work, we need to spend a bit of time explaining what your Owners Corporation is and what it’s required to do.


The Owners Corporations, or the body corporate as it was once known, is the collective body of all the owners within a Plan of Subdivision.


All owners have shared ownership of a property’s common areas, amenities, assets, and services, and collectively they need to ensure the property remains in good nick, with adequate services (cleaning, waste management, etc), maintenance of assets (lifts, garage doors, etc), insurance and funds for unexpected repairs over the course of the year.


The Owners Corporation is the body responsible for ticking off these legislative requirements, as described in the Owners Corporation Act (VIC) 2006.


In effect, your Owners Corporation is a business, all of the lot owners are shareholders, and its job is to keep your building well maintained, well serviced, and insured.


OCv Company Set Up


All of these responsibilities cost money and so it follows that another of the Owners Corporation’s functions is to raise an adequate amount of money to ensure it can pay for all these services and repairs.


That’s where your Owners Corporation budget comes in.



Every financial year, your Owners Corporation will decide on a budget at its Annual General Meeting (which you should definitely be attending).


The budget is split into various line items, from cleaning and caretaking to waste management and insurance.


At every Annual General Meeting, your Owners Corporation will review the previous financial year’s budget, how much was actually spent, how much is left in the bank account and whether or not the budget should be changed for the following year.


Strata Plan’s Accounts Team will always prepare a recommended budget, taking into account last year’s expenditure, any new expected expenditure, current contracts and any relevant CPI increases – as well as a contingency amount – for your Owners Corporation to consider.


Whether or not owners accept that budget, it is up to you and your fellow owners on the day of the meeting.


By the end of the meeting, your budget might look something like this:


budget example


Your Owners Corporation’s current budget is available on our Online Portal.




How many line items are on your building’s budget will vary depending on what assets your building has to maintain, how many services your building requires, and a variety of other features.


If your property is a high-rise, it may need to pay for an annual window clean. If your property has a pool, it will need to keep it well maintained. If your property has seven lifts, your Owners Corporation will need to budget for adequate servicing of those assets.


Your Owners Corporation might also decide to create a Maintenance Plan and fund to put money away over a long-term period to build a pool of funds for capital works on major assets in the future.


Whatever your Owners Corporation budget looks like, the final amount to be raised will directly inform how much your fees will be for the coming financial year.


The Owners Corporation budget must be raised in full by the end of the financial year, and the budget will apply to the new financial year until a new one is set.



Once you know what your Owners Corporation budget is, you will know what your Owners Corporation fees or levies will be for the financial year.


That’s because your Owners Corporation budget is divided among all lot owners based on lot liability.


Lot liability is set out in your property’s Plan of Subdivision and is usually assigned by the building surveyor when the plans for your building are drawn up. There is no uniform way this is calculated and can be affected by lot size, number of rooms, exclusive services to the lot, etc.


Lot liability is essentially what determines how much of the common property and common costs each lot owner is liable for. The Act defines it as, “expressing the proportion of the administrative and general expenses of the owners corporation which the lot owner is obliged to pay”.


In effect, the higher your lot liability, the larger share of the Owners Corporation budget you pay.


See below for an example of how lot liability affects how much each lot owner pays.


Lot Liability Example


If your Owners Corporation is managed by Strata Plan, your contribution will be raised over four payments, one for each quarter of the financial year.


Your fee notice will look something like this:


levy example

While your levy notice doesn’t show it, the money owed to your Owners Corporation helps to pay for all the items listed on your Owners Corporation budget.


In the description section of your levy, you will find your annual contribution listed, which should help you plan ahead for the rest of the financial year and keep a track of what sort of fees you should expect for the remainder of the financial year.


The money you pay goes directly into an account set up specifically for your Owners Corporation.


The money is used to pay for all the budgeted items and any other extra items as required and approved by your Owners Corporation.


You can pay your levies online using the Customer Portal, however, you will need your DEFT reference from the bottom of your levy notice. See below:


levy deft


PLEASE NOTE: Strata Plan changed its DEFT reference two years ago. Despite this, several customers continue to use the old reference number. PLEASE CHECK YOUR LATEST LEVIES FOR AN UPDATED REFERENCE NUMBER.



So now that we understand how your fees are calculated, what they contribute to and where your money is held, we can start to appreciate why it’s important to pay levies on time.


Owners Corporations typically budget to the minimum expected expenditure for the year and even the most prudent owners will not budget much more than 10 percent in contingency.


That means that when it comes to the day-to-day operation of your Owners Corporation, money is always required to ensure timely payment of all services your property requires.


Your Owners Corporation is a legal entity and as such, it can sue and be sued. It can even be placed into financial administration.


While that only happens in the most extreme of examples, it can quickly become a reality if too many lot owners fail to make timely payments.


Depending on the size of your building, the budget your Owners Corporation approved and the time of year, even one lot owner failing to pay on time can have disastrous effects on your Owners Corporation.


In some instances, contractors have even refused to carry out works on properties with Owners Corporations who have a track record of paying fees late on time.


This is a serious concern for Owners Corporations all over Australia and one that Strata Plan takes seriously.


Strata Plan has its own in-house debt recovery team focused on ensuring overdue levies are constantly chased up.


This four-stage process can ultimately end up in VCAT, while late payers may also be subject to penalty interest and penalty costs, depending on the powers granted to Strata Plan by your Owners Corporation.


Paying on time is the simplest way to meet your own personal obligations, help your Owners Corporations remain financially healthy, and ensure everyone involved in working on your building as authorised by your Owners Corporation is paid on time and happy.


If you would like to contact us with any queries please complete the form below and we will respond to you within 2 business days.

(If you don’t know your Plan Number, click here. You can also find your Plan of Subdivision Number on your fee notice)

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