Tax, interest and fees
An A body corporate created by registration of a plan of subdivision or a plan of strata or cluster subdivision. See also prescribed owners corporation. is considered to be a company by the Tax Office and must pay tax at the current company rate on all income exceeding $1. Income is money received (e.g. bank interest or rent from leasing common property) and not fees paid by members, which are regarded as mutual funds.
The ability to (1) A statement giving the details of a crime an accused person is claimed to have committed. (2) A personal property security. (3) A judge’s directions to a jury at the end of a case. interest on outstanding fees is capped at the maximum rate of interest payable under the Penalty Interest Rates A written law made by parliament. Also called an ‘Act of parliament’, ‘statute’ or legislation. 1983 (Vic) (s 29). It is necessary to pass a resolution to apply penalty interest and the decision to charge interest must be authorised at a general meeting. A committee has Power to choose whether to do something or not. For example, a judge may have discretion to allow a party extra time to complete a document if it would be unfair to enforce the legal time limit. to To give up a legal right or claim. or to reduce penalty interest. Such a decision must be explained by the owners corporation at an annual general meeting.
The notice of any fees and charges due and payable by the lot owner must allow at least 28 days for payment and must state the applicable interest rate and details of the dispute resolution process under the rules in respect of disputed fees and charges (s 31). A final notice must be provided thereafter as a prelude to legal action (s 32).
Professionals (e.g. All the property a person has, including real property and personal property. It is often used to describe property belonging to someone who has died, or the property of a bankrupt. agents) can hold member’s funds in their Found in a statute of delegated legislation. For example, a statutory authority or body is aperson or organisation that has special powers given by parliament to do work for the public benefit. A type of property ownership or arrangement where one party, known as the trustee, holds property or money for the benefit of another party, referred to as the beneficiary. accounts. A separate bank account may be opened for each owners corporation or held in a manager’s pooled or A bank account in which money is held on behalf another person, not for the use of the account holder. For example, a lawyer’s trust account holds clients’ money. It is regulated by strict accounting rules that safeguard the clients’ interests. For example, a trustee may hold a child’s inheritance for them until they turn 18. (s 27). An owners corporation that has an approved Money paid to a person to financially support them. When a couple has separated both parents have a duty to support their children, and a court can order a parent to make regular payments to support the children. Maintenance for a spouse is now less common, and must be applied for within 12 months of a divorce. It is usually covered in a final settlement of all property. plan (see ‘Maintenance plans and funds’, below) must keep separate accounts for its maintenance fund (s 33(2)). This does not require a separate bank account.
Borrowing money in The amount a person does not get back from the insurer when they make a claim on their insurance. For example, if a car is insured for an agreed value of $10 000 with an excess of $1000, the insurer will pay only $9000 on a claim if the car is written off. of the current annual fees of the owners corporation requires a special resolution (s 25 (1)(b)).
Prescribed owners corporations
Under regulation 6 of the OC Regulations, a ‘prescribed owners corporation’ is:
- an owners corporation that levies annual fees in excess of $200 000 in a financial year; or
- an owners corporation that comprises more than 100 lots including any accessory lots (e.g. a car park or storage area).
A An owners corporation that levies annual fees in excess of $200 000 in a financial year, or is responsible for a complex of more than 100 lots, including any accessory lots such as car parks or storage areas. must, after the end of each financial year, have its financial statements audited (s 35(2)). An owners corporation may apply in writing to the Director of Under the Australian Consumer Law, a person who buys goods or services for less than $40 000 or for personal or home use. Affairs Victoria (see ‘Contacts’ at the end of this chapter) for an exemption from the requirements of this subsection (s 35(6)).
A prescribed owners corporation must prepare a maintenance plan setting out certain requirements, such as major capital items anticipated to require repair or maintenance within the next 10 years (s 37(1)(a)) and the estimated cost (s 37(1)(d)). The prescribed items of a capital nature are common property structures, including the roof, stairways, balustrades and window frames; common property services, such as shared water, gas and sewerage pipes, pumps, drains, electrical and telephone infrastructure; and common property assets, such as fences, pools and water tanks (r 7). It is significant to note that while a prescribed owners corporation must prepare a maintenance plan under section 36(1), there is no compulsion to approve the plan under section 38. However, a failure to implement a maintenance plan might be seen as a failure to act honestly and in good faith or as a failure to exercise due care and diligence (s 5).
Maintenance plans and funds
A maintenance plan is discretionary for a non-prescribed owners corporation (s 36(2)). Once approved, an owners corporation must establish a maintenance fund and pay into that fund any part of the annual fees levied for the purposes of the maintenance plan (s 42).
An approved maintenance fund (ss 40, 41) is equivalent to what is commonly known as a ‘sinking fund’ or ‘reserve fund’. Subject to any prior conditions, money may be paid out of the maintenance fund at any time in accordance with the approved maintenance plan (s 43). Money may also be paid out of the maintenance fund if the owners corporation, by special resolution, approves the payment (s 44) or without a resolution of members for urgent matters described in section 45(2).
A maintenance plan is approved by ordinary resolution of the owners corporation (s 38(1)) at a general meeting, or by the committee. Implementation of the plan must be reported to the lot owners as soon as possible.