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The contributions are otherwise known as the body corporate levies. The size and the frequency of the contributions required to properly manage the common property of the body corporate are decided by the owners each year at the Annual General Meeting (AGM) of the body corporate.
At the budget committee meeting, which is held before the AGM, a special review of the financial requirements of the body corporate is undertaken by the Committee. For this meeting proposed budgets for the administrative and sinking funds are prepared by the body corporate manager. The proposed administrative fund budget is based on the actual administrative fund expenditure for the previous financial year and any additional expenditure advised by the committee. The proposed sinking fund budget is based on the expenditure noted in the sinking fund forecast for a particular financial year which is prepared by a quantity surveyor. Decisions at the budget committee meeting are made on the major projects to be undertaken for the scheme and if they are not included in the sinking fund forecast, provision has to be made for them in the proposed sinking fund budget.
Examples of major projects are as follows:-
- Maintaining the common property (e.g. painting); and
- Improvements to common property (e.g. heating the pool).
- From this review come recommendations in the AGM agenda, which are voted on by the owners.
- There are usually two types of contributions set by the body corporate
- The contributions to the administration fund; and
- The contributions to the sinking fund.
The contributions to an insurance fund are required if the interest entitlements allocated to the lots in the scheme differ from the contribution lot entitlements.
