Once levies have been collected from all owners, they are typically divided into two funds; an Administration Fund and a Sinking Fund.
The Administration Fund is used for regular payments including council expenses, insurance, management fees and payments to service contractors, cleaning, general maintenance and repairs, and utilities such as power and water.
The Sinking Fund is essentially a savings account for the Corporation for future major expenses as the building ages. This fund covers non-recurring maintenance expenses such as painting, tiling, plumbing, carpet and plant and equipment, or the purchase of new Corporation assets.
This budget is based on a Sinking Fund Analysis, or a Statement of Expenditure, which is a compulsory legal requirement for Corporations larger than 6 lots.
Having a healthy Sinking Fund reduces the need to raise a ‘special levy’ to pay for unexpected costs. It makes good management and smart financial sense.