If you own a flat, apartment or a property unit, you’re likely to be part of an owners corporation, formerly known as a “body corporate”. Under property law in Australia, the daily operations and management of a property is known as “strata management”.

Yes, little old you could very well be able to exercise, as part of this “body”, the ability to propose, write in and adminiister by-laws relating to the property and issues related to management.

Essentially, as part of an owners corporation, you hold ownership of your own unit as well as common property such as external walls, windows, roofs, driveways, foyers, fences, lawns and gardens.

And, an ownership corporation can apply to: residential & commercial property, industrial, mixed use, as well as hotels and retirement divisions.

Now take a moment to think: besides your home property, are there other properties that you’ve perhaps invested in or own? If so, read on to find out all about your responsibilities as part of an owners corporation and the professionals involved in supporting strata management.

What is an Owners Corporation? 

At the moment of conception of a new planned subdivision, something else is born: an owners corporation is registered with the city’s land development division. For example, in Victoria, Land Victoria registers and records the applications of individuals who apply to be a part of the owners corporation once the plan for the subdivision has been registered.

The idea behind an owners corporation is that, together, the collective group of owners should act in common interest to take care of common areas. It’s essentially your job then, as part of this body, to manage, repair, administer, and generally maintain the common parts of the property.

Again, “common” refers to spaces like gardens, stairwells, pathways, driveways, etc. A full list of responsibilities is outlined in the Owners Corporations Act 2006.

So who, precisely, is a part of the owners corporation? Anyone who has been assigned to (in other words, has purchased) a “lot” as part of the planned subdivision. And, there can be more than one owners corporation for a building or a plot of land.

You may not have expected it but simply through your purchase, you are now legally and fiscally responsible to the owners corporation.

What Are Some of the Responsibilities of an Owners Corporation?

As part of the body corporate or owners corporation, members have the joint ability to set fees and are responsible for more than just the annual fees that cover general admin, maintenance and insurance.

This is what constitutes the annual budget. The owners corporation body must sit down together and decide what the total cost of administration, maintenance and insurance might be. Some of these figures are fixed and predictable. Some are less so and allocations will have to be made for unforeseen issues.

In these cases, it’s wise to have a maintenance plan that helps members decide how much money goes for necessary works during the year and, what is likely to make up that “necessary work” during the year.

But keep in mind that with a maintenance place comes a mandatory maintenance fund which members must contribute to on a periodic basis.

Owners corporations must also do the following

    • they must manage the common property areas
    • where required, they must repair and maintain the common property, fixtures and services
    • insurance is also the purview of this body and members must maintain it
    • they are responsible for raising funds by raising special fees, for sudden
    • they are legally responsible to both prepare financial statements and keep accurate records
    • establish and follow through with a grievance procedure
    • keep a register and provide certificates when requested

Together, the members of the owners corporation are in control, collectively, of all the decisions and the decision-making process. Yes, they can outsource or delegate powers, but only for issues that don’t require a unanimous consensus.

They can also overturn earlier decisions and must create sub-committees that, while it cannot make decisions, can make recommendations for members to vote on.

What Are The Tax Requirements of an Owners Corporation?

The Owners Corporation is not just a regulatory or management body. They are also responsible for the legal and financial matters pertaining to common property. Any funds they raise, fees they levy and expenses the property incurs under the owners corporation’s administration is subject to taxes and financial record-keeping.

So, obviously, owners corporations require a tax file number, an ABN and for the body to register for GST.

For accounting and tax purposes, an owners corporation accountant is the best kind of professional to give advice as well s deal with the nitty gritty paperwork. However, generally speaking, the owners corporation is seen as a single entity, not unlike a company.

That means members cannot be held personally liable, though the entity they form as a collective part of the owners corporation can. If the property makes income, it must be claimed. Income from sources such as the following are viable:

    • leasing common property
    • interest from investments made
    • fees for issuing certificates
    • any sale or rental of common property
    • fees charged for servicing lots

Annual fees and special fees and charges are not chargeable. Furthermore, all income earned should be included in the personal tax returns of the individual lot owners.

The Role of an Owners Corporation Management Team

Of course, unit owners — who essentially make up the members of the owners corporation — are not necessarily well-versed, right away, with the ins and outs of the operational, administrative and legislative aspects.

This is why many bodies choose to employ, as support and separate oversight, individuals with specialised knowledge of building and common area maintenance. The individuals are not real estate agents but are closer to property managers, insofar as they have the knowledge to help members arrive at consensus and make decisions based on local law.

The owners corporation body can also have mangers be the coordinators of tasks like conducting meetings, collecting fees and depositing them, arranging for maintenance professionals and their services, advising on asset management, keeping up to date with insurance and financial records as well as smaller minutiae like paying invoices, maintaining registers and attending to correspondence.

These individuals are also known as strata managers and shouldn’t be confused with an owners corporation accountant. These accountants have an even more specialised scope of operation, as they focus solely on the financial and tax aspects.