CONFUSED BY AGM LEVY MOTIONS?

Here’s What the Numbers Really Mean and How to See What You’ll Actually Pay

Each year, owners are asked to vote on budgets and levy contributions at the Annual General Meeting. However, many owners are unsure how to interpret the levy tables included in AGM notices or how those figures translate into the amount they will actually pay.

In this article, we’ll break down AGM budget motions, explain the information contained in levy table schedules and show you how to calculate your anticipated levy contributions of the next proposed financial year.

For an overview of Levies in general and what they fund, see our article “Understanding Body Corporate Levies: How They Are Determined and What They Cover.”

What Am I Voting on When I See the AGM Budget Motions?

Each financial year, the body corporate adopts budgets for its various funds and determines how much money is required to meet expected expenses for the coming year.

Once the budget is approved, levies are issued to owners to fund those expenses.

Each Strata Scheme has its own unique Financial Year, often this does not follow the standard Tax time Financial year.

How Much Will I Pay in Levies Next Year?

Your levy amount is determined by the total budget approved by the body corporate and your lot’s entitlement within the scheme. If the budget increases or decreases, your levy contribution will generally change accordingly.

How Do I Read the Levy Table in an AGM Motion?

One of the most common questions owners ask is:

“How do I know what this budget table means for my levies and how much I will be required to pay?”

The levy tables included with AGM motions are designed to show:

• How much money the body corporate intends to collect.
• Which funds the money will be allocated to.
• When contributions will be due.
• The amount payable per lot entitlement.

Depending on the scheme, you may see separate motions relating to:

• Administrative Fund contributions.
• Sinking Fund contributions.
• Insurance Fund contributions (if applicable).

These tables provide the information owners need to calculate their future levy obligations.

A typical levy table presented in the AGM Notice looks like the below example:

What do the columns in the table mean?

While formats differ between bodies corporate, you will commonly see:

How Do I Calculate My Levy?

A simple formula is:

Your Lot Entitlement X the Contribution/Interest Entitlement amount from the AGM table =

Your levy costs for that period

Where Can I Find My Lot Entitlements?

One of the most important pieces of information when reviewing proposed levies is your lot entitlement. Owners can find their Entitlements on their Community Management Statement (CMS) or on the top right-hand corner of their levy notice.

Understanding your entitlement is essential because it explains why levy amounts can vary from one lot to another within the same scheme.

• Administrative Fund and Sinking Fund contributions use Contribution entitlements.
• Insurance contributions use Interest entitlements where applicable.

How Do I Work Out What It Means for Me?

Using the table provided in this article as an example;

Jane owns in this scheme and has confirmed from her levy notice that her contribution entitlements are 560, and her interest entitlements are 563.

Jane receives her Levy notices every 6 months/ Half Yearly.

To calculate the first levy period, Jane multiplies her contribution entitlement of 560 by the amount shown in the AGM levy table ($5.36765), resulting in a levy of $3,005.88. This same calculation is then used to calculate the additional ‘To Be Issued’ periods in the table. By Adding all the periods together, Jane has calculated her yearly levy amount for the Administrative Fund.

The same calculation can be applied to the additional funds (Sinking Fund/Insurance Fund) to obtain the in-full yearly levy cost amount.

As this example is for the Administrative Fund, the Contribution entitlement for her lot is used. If we were calculating the Insurance fund, we would use her interest Entitlement amount.

Why Aren’t the Levy Fees Always a Straight Split Between Every Lot?

Not all lots are identical. Some schemes contain lots of different sizes, layouts or uses. Because levies are based on legislated lot contribution entitlements, costs cannot simply be divided equally unless all lots have equal entitlements.

Why Do Levies Change Every Year?

Levies are based on the body’s corporate anticipated expenses, so they can increase or decrease from year to year.

Common reasons include:

• Changes to insurance premiums.
• Rising utility costs.
• Inflation and contractor pricing.
• Additional maintenance requirements.
• Sinking fund forecast recommendations.
• Completion of major projects reducing future funding requirements.

If costs increase, levies may need to rise. If expenses reduce or sufficient surplus funds exist, levies may remain stable or even decrease. The objective is to ensure the body corporate has adequate funds to meet both current and future obligations.

What Is an Interim Levy?

An interim levy is a temporary contribution raised to ensure the body corporate has enough funds available before a new budget is adopted or when additional funds are required to meet immediate obligations. The Interim levy amount is often Half of the Full amount being raised for the scheme. Hence the interim levy notice issued to you, will often be cheaper than the previous levy/levies.

What Is a Special Levy?

A special levy (also called a special contribution) is an additional amount charged to owners when the body corporate needs to pay for an unexpected expense or there is not enough money available in its existing funds. Common examples include unforeseen major repairs, or large project works with higher costs that cannot be afforded with the regular levy budget amounts.

Why Are Levies Issued in Periods?

Rather than requiring owners to pay an entire year’s contribution in one payment, levy periods break annual budgets into manageable instalments, most commonly issued quarterly. This helps maintain steady cash flow for the body corporate throughout the year.

Depending on the scheme, these instalments may be issued quarterly or half-yearly.

What Should Owners Focus on When Reviewing the AGM Levy Table?

Rather than looking only at the final levy amount, review:

• Significant increases or decreases in insurance costs.
• Major changes to the sinking fund contribution.
• Large maintenance projects planned for the next year.
• Whether the sinking fund balance is keeping pace with future capital works.
• Any special or interim levies proposed in addition to ordinary contributions.

Final Thoughts

Levy notices and AGM budget motions can appear complex at first glance, but once you understand how entitlements, levy schedules and calculation methods work, it becomes much easier to interpret the figures presented.

By taking the time to review the supporting budget information, owners can gain a clearer understanding of not only what they are paying, but also how the body corporate is planning for the ongoing operation and maintenance of the scheme.

To learn more about body corporate finances, join us for our upcoming seminar series on this topic in your region – Register Here.

Article Contributed by Kristen Kewley, Strata Community Associate at Archers the Strata Professionals.

*This article provides general information only and should be read in conjunction with the Body Corporate and Community Management Act 1997 (Qld), the applicable regulation module and your scheme’s Community Management Statement.