Question: At a recent committee meeting, the committee voted to implement a discount for early payment of levy contributions. Is this a committee decision, or should this go to a general meeting?
Answer: The committee doesn’t have the authority to override the decision of the owners.
The inclusion of a discount is usually written into the motions to raise the admin and sinking fund levies. As owners approve these at a general meeting, the committee doesn’t have the authority to override the decision of the owners. Any changes to the current process would require approval at an Extraordinary General Meeting (EGM) or presentation at the next Annual General Meeting (AGM).
However, the committee does have the right to present motions to owners and to determine the wording of motions at future meetings. Therefore, if the outcome of the committee meeting were that the levy motions would be presented at the next AGM with the inclusion of a discount, that would be a fair decision. If owners agreed, they could then vote to approve the proposal.
For what it is worth, and from a manager’s perspective, I don’t think discounts are a positive for body corporates. My rationale is that levies are monies paid to yourself, and you can’t give yourself a discount. In other words, the body corporate can’t give the owners a true discount because the body corporate is the owners.
At most schemes where there is a discount, this is achieved by artificially raising the levies by an amount equal to the discount. To allow for a ten per cent discount, you must increase the budgeted amounts by ten per cent. If you don’t, there will be a shortfall in income. From an accounting perspective, this is unnecessary and sometimes leads to a confusing distortion of the accounts.
The counterargument to this is that people view discounts as an incentive to encourage owners to pay on time. However, most schemes also have penalties in place for non-payment to help regulate this issue. Empirically, I haven’t observed any differences in on-time payment rates at schemes with discounts versus those without. I know the accounts are cleaner, and there are fewer debates about whether payments are made on time at the buildings without discounts.
William Marquand Tower Body Corporate E: willmarquand@towerbodycorporate.com.au P: 07 5609 4924