Do we have to change the date of our Financial Year?
Financial year end change
Summary
The Amendments to the Strata Titles Act, which came into effect on 1st May 2020 implemented a change regarding a Strata Company's financial year. The definition of the 'financial year' now states that:
financial year for a strata company means —
- if the scheme by-laws are silent on the matter, the period of 12 months ending on 30th June; or
- if the scheme by-laws specify a period of 12 months ending on a different date as the financial year for the scheme, the period is specified in the by-laws;
A transitional provision of 5 years has been given to comply with this new change to ensure that owners have adequate time to meet them.
| Our situation | What does this mean? |
|---|---|
| "This doesn't apply to us as our Financial year-end is already 30th June" | Nothing more to do here. |
| "We don't think it matters, so we're happy to transition to 30th June" |
At the end of the 5-year transition period (1st May 2025), all strata companies that do not have a registered by-law will roll over to the financial year of - 1st July – 30th June. Your Strata Manager will complete this process. It will mean a different time of year for your Annual General Meeting (to comply with other strata legislation). It may also mean a change to your quarterly levy payment date & periods. Your Strata Manager will provide you with more information when this is due to occur. |
| "We want to keep our different financial year-end" |
We understand that the 30th June is a very busy time for some of our customers. If there is majority support of the owners who want to keep the current financial year for the scheme, a governance by-law will need to be adopted. Interestingly in this instance, the Governance by-law can be passed by ordinary resolution. The by-law will need to be drafted by a strata specialist lawyer, which will also trigger the requirement to lodge a consolidated set of by-laws. The cost depends on how many additional by-laws you have. Your Strata Manager can obtain a quote for this to be added to the budget. |
So. . . why has this change been implemented?
Your guess is as good as ours! We see no benefit to the change and would even suggest that the adjustment to AGM scheduling will inconvenience some owners.