As a result of recent changes to the Owners Corporations Act 2006, all Victorian Owners Corporations now fall into one of five tiered categories. These tiers are designed to provide greater clarity to Owners Corporations regarding their regulatory operation, financial reporting requirements, and maintenance planning.

How do you know which tier applies to your OC?

The tiers have been designed around the size of the Owners Corporation and whether or not the Owners Corporation shares common property other than services. The tiers are:

• Tier 1 – More than 100 occupiable lots (and not a services only OC)
• Tier 2 – 51-100 occupiable lots (and not a services only OC)
• Tier 3 – 10-50 occupiable lots (and not a services only OC)
• Tier 4 – 3-9 occupiable lots (and not a services only OC)
• Tier 5 – 2 lot subdivision or a services only OC

Financial Statements & Auditing

Tier 1, 2 & 3 OCs are required to prepare annual financial statements for presentation at annual general meetings. These statements must be in accordance with Australian accounting standards. A tier 4 OC must prepare and present annual financial statements for any financial year in which annual fees (contributions) are levied and collected. Tier 1 OC’s must have their financial statements audited by a registered/authorised auditor, or an accredited accountant at the end of each financial year. Tier 2 OC’s must have their financial statements reviewed by an independent person who is a member of CPA Australia, the institute of Public Accountants or Chartered Accountants Australia and New Zealand. Tiers 3, 4 & 5 OC’s may elect to have their financials audited by either of the methods applicable to tier 1 & 2 OC’s.

Maintenance Planning

To the rejoice of many lot owners and managers in Victoria, tier 1 & tier 2 OC’s must now prepare and approve a maintenance plan. Maintenance plans can be amended by the Owners Corporation via an ordinary resolution at a general meeting or by ballot. Tier 3, 4 & 5 OC’s may elect to prepare and approve a maintenance plan by ordinary resolution of the Owners Corporation.

Committees

Tier 1, 2 & 3 OC’s must elect a committee at each annual general meeting. Committees must have at least 3 but not more than 7 members, unless the OC resolves by ordinary resolution to increase the number of members. In this circumstance, the maximum number of members is 12. Tier 4 & 5 OC’s may choose to elect a committee but this is not compulsory. Head over to our friends at ‘Look Up Strata’ for more updates on the recent changes to the Owners Corporations Act 2006

https://www.lookupstrata.com.au/vic-new-five-tiered-system-for-owners-corporations/