Short answer
An NSW strata scheme must hold its money in two separate funds: the administrative fund for regular day-to-day running costs, and the capital works fund for major, long-term works. Under the Strata Schemes Management Act 2015 they’re kept in distinct accounts, and money generally can’t move from one to the other without a general-meeting resolution to repay it. Keeping the wall between them is what stops a scheme spending its long-term savings on this month’s bills.
The administrative fund — the everyday ledger
The day-to-day operating account. It pays for the recurring costs: common-area electricity, cleaning and gardening contracts, the managing agent’s fee (if any), building insurance premiums, and minor repairs. If it’s regular and keeps the building running this month, it comes from the admin fund.
The capital works fund — the long-term vault
Previously called the sinking fund. It’s the building’s long-term savings for major capital works — repainting the exterior, replacing lifts, re-roofing, major structural repairs. The scheme builds it up over years so big-ticket items don’t land owners with a sudden special levy.
The 10-year capital works plan
The owners corporation must maintain a 10-year capital works fund plan — a forecast of the major works coming up and how much to set aside each year to be ready for them. It’s what turns “we’ll worry about the roof later” into a funded plan.
The golden rule: keep the walls up
You can’t use capital works money for routine admin expenses (or vice versa) without a formal resolution and a plan to repay it. Blurring the two is one of the most common ways schemes end up short — and reaching for an emergency special levy.
Keeping both funds straight
Two funds, a 10-year plan, and every dollar accounted for is a lot to hold by hand. A system such as Straita keeps the two funds separate, tracks the capital works plan, and shows exactly what each fund holds — so the committee approves spending knowing the walls are intact.
Primary sources
- Strata Schemes Management Act 2015 (NSW) — the administrative fund, the capital works fund, and the 10-year capital works plan.
- NSW Government — Strata schemes (Fair Trading) — the two funds and how they work.