The sinking fund can grow through the following ways:
- Direct contributions from the owners’, >which may be levied/raised quarterly by the body corporate.
- Interest that has been received or accumulated from the investments of the fund.
- Money that has been received from insurance pay outs for major or capital items that have been destroyed or damaged.
All contributions by the owners’ (sinking fund levy) are often managed by a Community Management company – who are acting under the instructions of the body corporate.
It is the responsibility of the Body Corporate to raise, as a minimum, 2 annual funds –
These being, an administration fund and sinking fund.
The administration fund differs from the sinking fund in that, money is set a side to meet day-to-day recurrent working expenses or regular operating and maintenance costs. This can include paying for common area electricity supply, testing and tagging of fire equipment, purchasing consumables such as, toilet paper, pool chemicals, light bulbs, fertiliser, mulch etc. The administration fund can also be used to pay for insurance charges and other professional consultancy and administrative fees.
It is important to note that no amount of money can be transferred between the sinking fund and the administrative fund.