Strata Levies in Australia: How They're Set, Collected and What They Pay For
A practical guide to Australian strata levies: the two funds, how contributions are set at the AGM, what levies pay for, and what happens with arrears.
Strata levies are the regular contributions every lot owner pays to fund the running and long-term upkeep of a strata scheme. They are the financial engine of an owners corporation (also called a body corporate or strata company, depending on the state), and they cover everything from insurance and cleaning to the major capital works that keep a building standing for decades.
This guide explains how levies are calculated, who sets them, when they're collected, what they can pay for, and what happens when an owner falls behind. Rules differ across each state and territory, so treat the specifics here as a national overview and always check your scheme's by-laws and your relevant strata legislation.
What are strata levies and who has to pay them?
Strata levies are mandatory contributions levied on every lot owner to meet the shared costs of the scheme. If you own a lot in a strata-titled property — an apartment, townhouse, commercial suite or villa — you are liable to pay levies for as long as you own it.
Key points:
- Levies are set by the owners corporation, not by the strata manager. The manager administers them, but owners vote on the amounts.
- Liability attaches to the lot, not the person. When you buy, you take on the levy obligations from settlement; when you sell, unpaid levies are usually adjusted at settlement.
- Tenants do not pay levies. The owner remains liable even if the lot is rented out.
- Levies are payable regardless of whether you use the common property. You cannot opt out because you never use the pool or the lift.
What is the difference between the administrative fund and the capital works fund?
Australian strata schemes run two distinct funds, and levies are split between them. The administrative fund covers day-to-day running costs; the capital works fund (called the sinking fund in some states, or maintenance/reserve fund elsewhere) saves for major repairs and replacements over the long term.
Administrative fund — recurrent, predictable expenses, such as:
- Building insurance premiums
- Common-area electricity, water and gas
- Cleaning, gardening and pest control
- Lift and fire-equipment servicing contracts
- Strata management fees and audit costs
- Minor repairs and general maintenance
Capital works / sinking fund — large, infrequent, capital expenditure, such as:
- Repainting the building
- Replacing roofing, lifts, pumps or fencing
- Resurfacing driveways and car parks
- Major waterproofing and concrete remediation
Most jurisdictions require schemes (above a minimum size) to prepare a long-term capital works or maintenance plan — typically forecasting 10 years ahead — so the fund is built up gradually rather than through sudden one-off hits. The two funds must generally be kept separate, and money raised for one cannot simply be spent on the other without proper authority.
How are strata levies calculated and who sets them?
Levies are calculated by estimating the scheme's total budgeted costs for the year, then dividing that total between lots according to each lot's share of ownership. Owners then approve the amounts by resolution at the annual general meeting (AGM).
The process generally runs like this:
- Budget the year ahead. The committee and strata manager prepare proposed budgets for both the administrative fund and the capital works fund, informed by actual costs, contracts, insurance valuations and the capital works plan.
- Apportion by entitlement. Each lot's contribution is set in proportion to its unit entitlement (also called lot liability or lot entitlement, depending on the state). A larger or more valuable lot usually carries a higher entitlement and therefore a larger levy. Two identical units typically pay the same.
- Vote at the AGM. Owners pass a resolution to set the contributions for the coming period. This is normally an ordinary majority decision. Without that resolution, the owners corporation has no authority to raise the levies.
- Issue levy notices. Once approved, the manager issues notices to each owner showing the amount, the fund split and the due date.
Because levies are tied to unit entitlements rather than to floor area alone, owners sometimes dispute whether the entitlement schedule is fair. Entitlements are set on registration of the scheme and can usually only be changed by agreement or by application to a tribunal or court.
How and when are strata levies collected?
Levies are collected in regular instalments — most commonly quarterly, though some schemes bill monthly, half-yearly or annually — based on the schedule approved at the AGM. Owners receive a levy notice ahead of each due date.
Practical mechanics:
- Notice periods. Most states require a minimum period of notice before a levy falls due (often around 30 days), so owners have time to budget and pay.
- Payment methods. Payment is usually made to the owners corporation's bank account via BPAY, direct debit or electronic transfer, with each lot given a unique reference.
- Record-keeping and GST. The owners corporation must keep proper financial records and prepare annual financial statements, presented (and in some cases audited) at the AGM. Where a scheme is registered for GST — generally larger schemes whose turnover crosses the threshold — levies may include GST and the corporation claims input tax credits on its expenses.
- Software and oversight. Many schemes use dedicated strata or facilities-management platforms to issue notices, track payments and reconcile the books. AI-native tools such as Orveya can draft budgets and reconcile transactions, but financial decisions remain with the committee and owners — automation assists, it does not authorise spending.
What can strata levies legally be spent on?
Levies can only be spent on the lawful purposes of the owners corporation — broadly, maintaining and managing the common property and meeting the scheme's statutory obligations. They cannot be spent on an individual owner's private lot or for purposes outside the corporation's functions.
Common legitimate uses include:
- Maintaining, repairing and renewing common property and shared assets
- Insurance the scheme is required to hold (building, public liability and others)
- Compliance obligations — fire safety, lifts, asbestos and similar
- Administration, including management fees, meetings and record-keeping
- Funding the long-term capital works plan
Spending is constrained in important ways. Large expenditures above set thresholds usually require owner approval (sometimes by special resolution), and many schemes must obtain multiple quotes for significant works. Money in the capital works fund is generally reserved for capital items and should not be raided for routine operating costs. If owners believe funds are being misused, they can seek records, raise it at a meeting, or apply to the relevant tribunal.
What is a special levy and when is one raised?
A special levy is a one-off contribution raised on top of ordinary levies to cover a cost the existing funds cannot meet. It is typically used when a major, unbudgeted expense arises — and it must usually be approved by owners at a general meeting.
Special levies commonly fund:
- Urgent or unexpected major repairs (storm damage, structural defects, failed waterproofing)
- Capital works that exceed what the capital works fund has accumulated
- Legal costs or settlements the scheme must pay
Because special levies can be large and land with little warning, well-run schemes try to avoid them by keeping the capital works fund adequately funded against a realistic long-term plan. A healthy capital works balance is one of the clearest signs of a well-managed building. Like ordinary levies, a special levy is apportioned by unit entitlement and is legally enforceable once properly resolved.
What happens if an owner doesn't pay their strata levies?
Unpaid levies become a debt owed to the owners corporation, and the corporation has clear powers to recover them — including charging interest and, ultimately, taking legal action. Arrears are taken seriously because every dollar unpaid shifts the burden onto other owners.
The typical escalation path is:
- Reminder notices. The manager issues overdue reminders once a levy passes its due date.
- Interest on arrears. Most jurisdictions allow the owners corporation to charge interest on overdue levies at a capped rate (commonly around 10% per annum simple interest, though the figure and rules vary by state). Interest usually accrues automatically after a short grace period.
- Formal debt recovery. If the debt remains unpaid, the corporation can refer it for recovery — issuing a letter of demand, then commencing proceedings in a tribunal or court. Recovery costs and legal fees are often added to the debt.
- Judgment and enforcement. A judgment can be enforced through the usual means available to any creditor, and in serious cases the debt can be pursued at sale of the lot.
Consequences for the owner in arrears often go beyond money. In many states, an owner who is unfinancial (behind on levies) loses the right to vote on ordinary motions at meetings until the debt is cleared. Owners facing genuine hardship should contact the strata manager early — some schemes can agree to a payment plan rather than escalating straight to recovery.
Frequently asked questions
Are strata levies tax deductible?
It depends on how you use the lot. For an owner-occupier, levies on your own home are not deductible. For an investor renting out the lot, ordinary administrative-fund levies are generally deductible against rental income, while special levies for capital improvements may instead be treated as capital and depreciated. Tax treatment is specific to your circumstances, so confirm with a registered tax agent or accountant.
Can strata levies be increased without owner approval?
Generally no. Levies are set by resolution of the owners at a general meeting, so the owners corporation cannot lawfully raise ordinary contributions without that approval. The committee can recommend increases, but owners vote on them. Limited exceptions exist in some states for urgent situations, but the default is that owners decide.
How much should strata levies be?
There is no fixed figure — levies reflect the real cost of running and maintaining your specific building. A high-rise with lifts, a pool and a concierge will have far higher levies than a small block of villas. What matters more than the headline amount is whether the levies are realistic: very low levies often signal an underfunded capital works fund and a higher risk of special levies down the track.
Do I still pay levies if my lot is vacant or rented out?
Yes. Levies attach to the lot and to ownership, not to occupancy. You pay the same levies whether you live there, leave it empty, or rent it to a tenant. Tenants are not liable for levies — the owner always is.
What is the difference between a body corporate and an owners corporation?
They are the same concept under different state names. "Owners corporation" is used in New South Wales and Victoria, "body corporate" in Queensland, and other terms (such as strata company) apply elsewhere. In every case it refers to the collective body of lot owners responsible for the common property and for setting and collecting levies.