Administrative fund vs capital works fund — what's the difference?
The administrative fund covers day-to-day running costs — insurance, cleaning, minor repairs. The capital works fund covers major, infrequent expenditure like roofs, lifts and repainting.
Under the Strata Schemes Management Act 2015 (NSW), an owners corporation must keep both. They are separate accounts with separate purposes, and your quarterly levy is split between them.
- Administrative fund — insurance premiums, electricity for common areas, cleaning, gardening, the strata manager's fee, small repairs. Roughly, this year's running costs.
- Capital works fund (once called the sinking fund) — replacing the roof, the lift, the fences, repainting the building. Money set aside now for work that happens years from now.
The distinction matters because a healthy-looking total can hide an unhealthy split. A scheme with $60,000 across both funds is in a very different position depending on whether that is $55,000 of capital works savings and a thin admin balance, or a well-funded admin account and almost nothing put aside for a roof that is due.
Money can be moved between them, but not freely. Section 76 of the Act requires that an amount transferred from one fund to the other be repaid within three months, or within such later time as the owners corporation determines. A transfer with no repayment recorded is worth asking about.
“A transfer of $18,000.00 from the capital works fund to the administrative fund was recorded on 2 March 2025. The minutes do not record a resolution authorising the transfer, and no repayment schedule was sighted.”
A scheme paying its ordinary bills out of the capital works fund is borrowing from its own future. The money still has to be found when the roof needs doing.
What to ask
Copy these into an email. The people below can answer them; we can’t.
- To your strata manager: what are the current balances of both funds, and has any transfer between them been made and repaid?
- To your strata manager: does the ten year capital works plan show a shortfall against the current balance?
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Related
General information about what these documents say — not legal, building or financial advice, and not a substitute for your conveyancer, solicitor or licensed inspector. Law and practice change, schemes differ, and your contract may say something different from the general position described here.