NSW: What to do if the administration fund goes into deficit after unexpected expenses

This article discusses using the capital works fund to cover an administration fund deficit in NSW, explaining in plain language the options available to owners corporations after unexpected expenses.

Question: After some unexpected expenses, our owners corporation has an administration fund deficit. Can we use the capital works fund to cover the shortfall?

Our administration fund has fallen into a $20,000 deficit after paying our insurance and some unexpected maintenance costs. Staff at our strata management firm have given us conflicting advice about what to do next.

One person advised that all administration-related spending must stop until the fund is back in surplus, either by waiting for regular levy payments or by raising a special levy. Another suggested we transfer money from the capital works fund to cover the shortfall.

What are the rules around using different funds to pay expenses? What are some best practice guidelines for managing the administration fund so it does not fall into deficit in the future?

Answer: Plenty of admin funds have deficits. It’s not ideal, but it can be recouped in a couple of simple ways.

The advice to pause all admin-related works until the fund is back in surplus is incorrect.

Plenty of admin funds have deficits. It’s not ideal, but it can be recouped in a couple of simple ways.

1. At the next AGM, the following year’s budget should ensure levies pay for all budgeted expenses (as normal) plus the admin deficit.
2. At the next AGM, approve the permanent transfer of funds from the capital works fund to the admin fund to cover the deficit.
3. Although this is not the most ideal way, it’s also an opportunity to revisit some admin expense codings and consider whether they should have been capital works fund expenses.

Matthew Faulkner
Matthew Faulkner Accountancy PTY LTD
E: matt@mattfaulkner.accountants
P: 0438 116 374

This post appears in the March 2026 edition of The NSW Strata Magazine.

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Read next:

• NAT: Q&A Strata budgets should reflect past expenses, expected increases and owner priorities
• NSW: Q&A Capital Works Fund – What Do We Need To Do Now?
• NSW: Q&A Capital Works Expenses. What to do about the Overspends?

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