Every Day is EOFY for Strata Buildings
or, strata money, money, money [and reports] …
A Quick Read
Whilst almost everyone in Australia is focused on 30 June for their money, reporting and taxation affairs, strata building and citizens aren’t. That’s because strata buildings’ financial year is linked to their creation date. And it’s because strata building finances are really all about every strata owners’ money, assets and liabilities. So, every day is EOFY for strata buildings and strata owners everywhere.
[a 7:75 minute read, with 1533 words]
The Full Article
INTRODUCTION
As the financial year winds down in Australia, people and businesses of all types scramble to close their books, reconcile their accounts, and prepare for a new fiscal chapter.
But while most attention is often on corporate tax or individual returns, the end of financial year is just as important, perhaps even more complex, and different for strata buildings and strata owners.
There are a number of reasons for that, including:
Strata building financial years don’t end and start on 30 June. Rather, every strata building’s financial year cycle starts and ends on a date that’s linked to their creation date and their first owners’ meeting.
Strata building money is actually the strata owners’ money. As its custodian, strata buildings are accountable to the strata owners for how that money is collected, spent, kept and recorded every day, not just once per year.
Since strata owners come and go randomly throughout the year, transferring their credit [or debt balances] from old to new owners, it’s important that strata building accounting is up to date.
So, every day is like the end of the financial year for strata buildings and strata owners.
With over 3.5 million Australians living in strata titled apartments, townhouses, mixed-use and commercial strata buildings, this continuous end of financial year has wide reaching implications for strata buildings, strata owners, and the professionals who manage these high density complexes and to ensure the building is financially sound and governance-compliant for the year, month, week and days ahead.
So, what broad [rather than detailed] financial management and reporting principles apply?
THE ANNUAL FINANCIAL STATEMENT: MORE THAN JUST NUMBERS
For strata buildings, the end of the financial year involves the preparation and presentation of the annual financial statement. This report summarises all income, expenses, levies, capital works levies, arrears, and [sometimes contingent liabilities] plus any surplus or deficit for the period.
While it may seem routine, the stakes are high.
These statements provide transparency and accountability to strata owners, financiers, insurers and regulators. And, they are used to plan for the next year and beyond.
So, they can also be a source of tension or trust, depending on their accuracy and clarity.
Strata committee members must ensure that the statements reflect actual building activity, including proper allocation of expenditure across administrative and capital works funds and ledger categories.
For self managed strata buildings or those with inexperienced strata committees, this process can be daunting.
Mistakes or omissions may not just cause confusion. They may expose the building to mistakes, cash flow problems, and legal and financial risks.
Which is why many strata buildings use independent auditors or professional managers to assist.
BUDGET PLANNING: EOFY IS TOMORROW’S BLUEPRINT
Just as important as closing off last year’s accounts is planning for the next one. And, the end of the financial year is when many strata buildings draft and adopt the building’s annual budget.
This includes estimating:
Utilities.
Insurance.
Maintenance.
Cleaning.
Capital works (planned or emergency).
Professional fees (legal, accounting, strata management).
Inflation adjustments.
Contingencies.
Plus, so much more.
The annual budget directly informs the strata levies each strata owner must pay, and indirectly shapes the amenity, safety, and value of the strata building.
Poor budgeting decisions made at the end of each financial year can lead to strata levy shortfalls, deferred maintenance, special levies, and disputes down the track.
Smart budgeting, on the other hand, aligns strata building expenditure with strata owner priorities and long term needs, which is important everywhere but especially critical for ageing buildings.
CAPITAL WORKS FUND REVIEWS: ARE YOU SAVING ENOUGH?
The capital works fund (or sinking fund) is the strata equivalent of a retirement nest egg or superannuation, and the end of the financial year is the best time to review whether contributions and strata levies are adequate.
Every strata building in New South Wales, and many in other states, must have a long term capital works plan and contribute enough to meet expected costs over a 10 year+ horizon. And, the end of the financial year also provides an opportunity to update those forecasts and adjust strata levies accordingly.
Ignoring capital works needs may save money today, but create financial pain, increased costs and maybe even legal risk tomorrow.
For strata buildings facing major repairs (to facade upgrades, waterproofing, structural issues, etc), the end of the financial year can also be a time to review strata building financing options [including strata loans] and to assess their pros and cons.
INSURANCE REVIEWS: RENEW, COMPARE, COMPLY
Strata insurance is typically renewed annually. Sometimes renewal dates coincide with the end of the financial year, and sometimes they don’t.
But even if they don’t have a common anniversary, the end of the financial year is a prime moment to reassess coverage levels, exclusions, premiums, broker arrangements, etc, without the pressure of looming expiry dates.
Insurers are increasingly scrutinising strata buildings for defects, combustible cladding, age, and location. As a result, many strata buildings are seeing premium hikes or coverage restrictions.
Strata buildings, committees and managers should treat the end of the financial year as an opportunity to:
Review the current policy with independent advice.
Ensure the sum insured reflects current replacement costs.
Assess whether all common property and shared liabilities are covered.
Decide about what extras should and shouldn’t be covered.
Understand whether brokers are charging fair, transparent commissions
TAX TIME FOR BUILDINGS: YES, STRATA HAS AN ABN TOO
While individual owners deal with the ATO on personal tax, most strata schemes are themselves registered with an Australian Business Number and Tax File Number and lodge BAS and tax returns covering all kinds of revenues and expenditures, each with different and sometimes complex tax outcomes.
So, a strata building’s end of financial year is a key time to:
Review whether the building has assessable income [and whether that income is assessable in the strata building’s or strata lot owners’ hands].
Check whether BAS statements are being lodged correctly (if registered for GST) and/or need amendment.
Clarify whether professional assistance is needed for compliance and, if so, arrange it.
And, in cases where strata owners may be entitled to deduct strata levies (partially or fully) as an investment expense, they rely on end of year strata levy statements to prepare their personal tax returns.
GOVERNANCE HOUSEKEEPING: MORE THAN JUST DOLLARS
A strata building’s end of financial year is also a chance to conduct non-financial reviews that influence a strata building’s operations and compliance including:
Reviewing service contracts (e.g. cleaners, lift providers, utilities, etc).
Reviewing strata committee appointees, terms and office bearers.
Confirming whether annual general meetings compliance and scheduling.
Checking that strata records are up to date, accurate and complete, and to update them if necessary.
Preparing for future for major decisions and necessary research, information and decisions.
The new financial year is therefore also an opportunity to reset strata building’s operations with purpose and precision, and to clean up governance lag, which is surprisingly common.
OPPORTUNITIES FOR MANAGERS: EOFY AS A VALUE MOMENT
For strata managers, a strata building’s end of financial year is both a burden and a branding and sales moment.
It requires hours of reconciliation, reporting, and strata owner liaison, but it’s also a time to demonstrate capability, care, and competence.
Strata managers who provide timely, clear reports, guide strata committees through budgeting, and proactively raise issues like insurance risk or capital works shortfalls stand out. It also offers the chance for managers to recommend strategic improvements, such as energy audits, defect rectification, digital levy systems, or community-building initiatives.
On the flip side, strata managers who deliver late or incomplete end of financial year information and reporting and don’t manage the decision making erode trust and open the door for competitors.
OPPORTUNITIES FOR STRATA OWNERS: EOFY AS A PARTICIPATION TRIGGER
If you’re a strata owner, the end of the financial year may seem distant. But behind the scenes, the strata decisions being made affect the maintenance of common property, the responsiveness of the strata committee and strata managers, and the affordability of your housing and the value of your strata levies.
So, it’s a good time to review and think about the information you’ve received about the strata building, over the past year, and ask for things that you think are missing, interest you, and/or affect your investment and/or living conditions like, upcoming works or strata levy related costs.
CONCLUSIONS
The end of the financial year isn’t just [or even] an accounting deadline for Australian strata buildings, whether it’s once a year or every day.
It’s also a moment of truth for the long term health of every strata building.
Whether you’re on the strata committee, an engaged strata owner, a seasoned strata manager or a disinterested owner, it is your opportunity to:
Assess how the strata building performed financially.
Set a clear, funded vision for the year ahead.
Fix what’s not working.
And invest in what will.
After all, in strata living [like in life], the balance sheet may tell you where you’ve been. But it’s the budget and the plan that determine where you’re going.
June 30, 2025
Francesco ...