Queensland Sinking Fund Forecast: Is a 10-Year Forecast Required, and How to Budget It

The short answer

• A professional forecast isn't legally required. The Queensland Government says a body corporate "does not have to get a professional sinking fund forecast". The committee or an owner can estimate the spending.
• A 9-year reserve is required. The sinking fund budget must raise enough for this year's capital spending, plus an appropriate share of major spending expected over at least the next 9 years (s 160(3)).
• The developer provides a 10-year estimate. At the first AGM, the original owner must hand over a detailed estimate of sinking fund spending for the first 10 years (s 96). After that, keeping it current is the body corporate's job.
• The money is separate. It can't be moved between the sinking fund and the administrative fund (s 167(7)).

The rules in one place

What the sinking fund pays for

The sinking fund can pay for (s 169):

• spending of a capital or non-recurrent nature
• periodic replacement of major capital items
• other spending that should reasonably be met from capital

Everything else comes from the administrative fund. The regulation gives repainting common property and replacing air-conditioning plant as sinking fund examples, and insurance as an administrative fund example. "Recurrent" means spending normally made once a year or more often.

How to estimate and budget it

1. Start with what you have. Use the original owner's 10-year estimate, the last budget, and any previous forecast or condition report.
2. List the major items. Painting, roof, waterproofing, lifts, air-conditioning, pumps, fences, carpets, pool equipment, driveways. Record each item's condition and when it's likely to need work.
3. Estimate the cost and year for each item over the next 9 years, and further out for big items such as lifts.
4. Spread the cost. For each item, raise an even share each year until it falls due. The regulation's own example is painting due in 3 years: collect a third each year, and adjust as the estimate rises.
5. Add this year's spending from the sinking fund.
6. Set the contribution. The total is the sinking fund contribution in the proposed budget (s 160(3)).
7. Send it with the AGM notice. The AGM adopts it by ordinary resolution and can change it by up to 10% (ss 160–161).
8. Update it every year as costs and condition change.

You can ask a professional to prepare the forecast. The Queensland Government says it's a matter for each body corporate.

Checklist

• The original owner's 10-year estimate, or the last forecast, is on file
• Every major common property item is listed, with its condition
• Each item has an estimated cost and year, at least 9 years ahead
• This year's sinking fund spending is included
• The contribution covers this year plus an appropriate share of the 9-year reserve
• Recurrent costs, such as insurance, are in the administrative fund budget, not the sinking fund
• The proposed budget goes out with the AGM notice
• The estimate is reviewed before each year's budget

If the fund falls short

If a cost comes up that the budget didn't provide for, or didn't provide enough for, the body corporate must fix a special contribution by ordinary resolution (s 162(2)). Spending over the major spending limit also needs at least 2 quotes (ss 173–174). A fund that keeps falling short usually means the contribution was set too low.

What buyers see

A buyer receives a body corporate certificate before signing (Property Law Act 2023 s 99; BCCM Act s 205). It shows the sinking fund balance, but not a forecast. A buyer who wants to know whether the balance is enough can ask to inspect the budget, the minutes and any forecast (BCCM Act s 205).

Disputes

If an owner thinks a contribution is unreasonable, whether too high or too low, an adjudicator can order it reduced or increased to a reasonable amount (BCCM Act Schedule 5, item 11). Owners can also propose an alternative budget by motion at a general meeting.

Common questions

Do we need a 10-year forecast?

Not by law. You need a budget that reserves for major spending over at least the next 9 years (s 160(3)). A forecast, professional or not, is the usual way to work that out.

How often should we update it?

The law doesn't set a cycle. Because the sinking fund budget is adopted every year, review the estimate before each AGM.

Can we move money from the sinking fund to cover a shortfall in the admin fund?

No. Transfers between the funds aren't allowed (s 167(7)). A shortfall in either fund needs a special contribution.

Where UnitBuddy fits

UnitBuddy keeps the long-term plan beside the sinking fund balance and levies, so the committee can see each year's planned work against what's in the fund when it prepares the budget.

Further reading

Keep the scheme file in one place the committee and the manager can both open. Features, pricing, or book a tour.