Body Corporate Financial Management
Sinking funds, budgets, and financial reporting.
Sound financial management is the backbone of a well-run body corporate. When the money is managed properly, levies stay fair, the building stays maintained, and there are no unpleasant surprises. This page explains how your scheme’s finances work and what to look out for. Need a manager with strong financial systems? Get 3 free proposals from our established and trusted partners.
How does the body corporate budget work?
The budget is a forecast of all expected income and expenses for the coming year. It is prepared by the body corporate manager (usually with input from the committee) and must be approved by lot owners at the annual general meeting. The budget determines how much each lot owner pays in levies for the year ahead.
Who prepares the budget?
The body corporate manager typically prepares a draft budget based on the previous year’s actual expenses, known upcoming costs, and any planned works. The committee reviews the draft and may request changes before it is presented to all lot owners at the AGM for approval. The budget should be realistic and well-documented so owners can understand where their money is going.
What are the body corporate’s main financial accounts?
Most schemes have two main accounts. The administrative fund covers day-to-day running costs like insurance, management fees, utilities, cleaning, and minor repairs. The sinking fund (capital works fund in NSW) is a savings account for major long-term expenses like repainting, roof replacement, and lift upgrades. Some schemes may also have a separate insurance fund or reserve.
What financial statements should I expect to see?
At a minimum, you should see an income and expenditure statement showing what came in and what went out, a balance sheet showing the current position of each fund, and a comparison of actual spending against the budget. These statements are presented at the AGM and should be available from your manager on request at any time during the year.
Do body corporate accounts need to be audited?
In Queensland, auditing is not mandatory for all schemes, but larger schemes or those with higher budgets may choose to have an audit. In NSW, an audit is not automatically required unless the owners corporation passes a resolution to have one, or it is required under the scheme’s by-laws. Even when not required, an independent audit can provide confidence that funds are being managed correctly.
Can I request to see the financial records?
Yes. Every lot owner has the right to inspect the body corporate’s financial records. You can request copies from your body corporate manager. In Queensland, the body corporate must make records available for inspection within a reasonable timeframe. In NSW, you can request access to records by giving written notice. There may be a small fee for copies.
What should I look for in the financial statements?
Check whether actual spending is close to the budget, whether the sinking fund balance is growing or declining, whether any unusual or unexpected expenses have appeared, and whether levy arrears are being managed. If the sinking fund is consistently underfunded, it may signal that a special levy is on the horizon. Ask questions at the AGM if anything does not look right.
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Who controls the body corporate’s bank accounts?
The body corporate’s bank accounts are held in the name of the body corporate, not the manager. The body corporate manager is usually authorised to operate the accounts on behalf of the committee, but the committee retains oversight and can change signatories or banking arrangements. Some schemes require two signatures for payments above a certain amount.
Can the body corporate invest its surplus funds?
Body corporate funds can generally be held in savings accounts or term deposits. The legislation in both QLD and NSW restricts the types of investments a body corporate can make, typically to low-risk options like bank deposits. The committee should ensure funds earn a reasonable return while remaining accessible when needed for maintenance or repairs.
What happens if the body corporate runs out of money?
If the funds are insufficient to cover expenses, the committee may need to call an EGM to propose a special levy. The body corporate cannot borrow money easily (borrowing powers are limited under the legislation in both states). This is why accurate budgeting and regular sinking fund reviews are so important. Running out of money usually means the budget was set too low or levy arrears have not been collected.
Can the body corporate borrow money?
Borrowing is possible but restricted. In Queensland, the body corporate can borrow money but only with approval at a general meeting and only for specific purposes. In NSW, the owners corporation can borrow under certain conditions with proper authorisation. In practice, most schemes fund major works through the sinking fund or special levies rather than taking on debt.
What is a levy recovery process?
When lot owners fall behind on their levies, the body corporate follows a debt recovery process. This typically starts with a reminder notice, followed by a formal demand, then penalty interest charges, and ultimately legal action if the debt is not paid. The body corporate can register a charge against the lot owner’s property and, in extreme cases, pursue the debt through the courts. Most managers handle levy recovery as part of their standard service.
How are insurance premiums managed?
Insurance is typically one of the largest single expenses in the budget. The body corporate manager arranges the insurance on behalf of the scheme and ensures it is renewed each year. The committee should review the insurance policy at the AGM to confirm the coverage is adequate and the premium is competitive. Some managers obtain multiple quotes at renewal time to ensure the best value.
What is the role of the treasurer in financial management?
The treasurer provides financial oversight on behalf of the committee. This includes reviewing financial statements, monitoring fund balances, checking that levies are being collected, and raising any concerns about spending or budgeting. The body corporate manager handles the day-to-day accounting, but the treasurer acts as a check to ensure the finances are in order. For more on committee roles, see our Committees and Decision Making page.
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Explore more topics
- Fees and Costs – levies, sinking funds, and what your fees cover
- Insurance – what body corporate insurance covers and how claims work
- Meetings (AGM/EGM) – where budgets are approved and financial decisions are made
- Committees and Decision Making – the committee’s role in financial oversight
Browse all topics on the Knowledge Hub, or meet our management partners.
Related guides
- How Are Body Corporate Fees Calculated? – Budget to levy notice, with a worked example.
- Who Pays for the Body Corporate Manager? – How the management fee is funded through the administration fund.
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Primary sources and further reading
The information on this page is drawn from the following primary sources. Use these for the definitive legal position in your jurisdiction.
Queensland
- Body Corporate and Community Management Act 1997 (Qld)
- Queensland Government, Body corporate information
- Queensland Civil and Administrative Tribunal (QCAT)
New South Wales