Is a sinking fund the same as a capital works fund?

Yes — they are the same thing under different names. "Capital works fund" is the legal term in New South Wales since 2015; "sinking fund" is the term in Queensland and the common name used nationally. Both refer to the fund that saves for major, periodic repairs and replacements.

What's the difference between the sinking fund and the admin fund?

The admin fund covers recurring day-to-day costs — insurance, cleaning, gardening, management fees and minor repairs. The sinking fund covers large, irregular capital works such as the roof, lifts, façade and repainting. They are kept as separate accounts and money should not be shuffled freely between them.

Who decides the sinking fund levy?

Owners set it by vote at the annual general meeting, usually on the strata committee's or manager's recommendation. The figure should come from the scheme's forecast or maintenance plan, and is then collected from owners by lot entitlement, typically each quarter alongside the admin fund levy.

What happens if the sinking fund runs out?

If a major repair is due and the fund can't cover it, the scheme usually has to raise a special levy — a one-off charge on every owner — or take out a strata loan, or delay the works. All three are worse than having saved enough in advance, which is exactly what a well-managed sinking fund is designed to avoid.

What Is a Sinking Fund?

A sinking fund is the savings account a strata scheme or owners corporation keeps for big, infrequent repairs and replacements — the new roof, the lift overhaul, the repaint, the waterproofing job. Every owner pays into it through their levies, a bit each quarter, so the money is already there when a major expense lands. It is the difference between a planned contribution of a few hundred dollars a quarter and a panicked special levy of several thousand dollars all at once.

Almost every apartment block, townhouse complex and commercial strata building in Australia has one, though the name changes from state to state. In New South Wales it is the capital works fund; in Victoria it sits behind a maintenance fund and maintenance plan; in Queensland it is the sinking fund. Whatever it is called on your levy notice, the job is the same: spread the cost of major works fairly across the owners who benefit, over time, instead of hitting whoever happens to own a lot in the year the bill arrives.

This guide explains what a sinking fund is, how it differs from the day-to-day admin fund, what it actually pays for, how it gets topped up, and why a properly funded one is the single best protection a committee has against nasty financial surprises.

Why a sinking fund exists

Buildings wear out on a predictable schedule. A roof might last 25 years, a lift 20 to 30, external paint 8 to 12, and a waterproofing membrane somewhere in between. None of these costs come due every year, but all of them are certain to come due eventually. A sinking fund exists so the scheme saves for them in advance rather than scrambling when the bill arrives.

There is a fairness point as well as a cash-flow one. The owner who lives in a unit for three years before selling has used a share of the roof, the lift and the paintwork. If the building only collects money in the year a major job is done, that owner pays nothing and whoever owns the lot at the wrong moment pays everything. Regular contributions to a sinking fund spread the cost across everyone who has had the benefit of the asset.

Most states reinforce this with law. Owners corporations and bodies corporate are generally required to hold a separate fund for capital and long-term maintenance, and several jurisdictions require a written forecast — a sinking fund forecast or maintenance plan — that projects the major works and the contributions needed to pay for them, usually over a ten-year horizon.

Sinking fund vs admin fund: two separate buckets

Every scheme runs two funds, and keeping them separate matters. The administrative fund (often just called the admin fund) covers recurring, predictable, day-to-day running costs: insurance premiums, cleaning, gardening, common-area electricity, the strata manager's fees, minor repairs and routine servicing. These are the bills that arrive every year in roughly the same amount.

The sinking fund covers the opposite kind of expense: large, irregular capital works and long-term maintenance that recur only every several years. Replacing a roof is a sinking-fund job; changing a blown light globe is an admin-fund job. The line is not always razor-sharp, but the test is useful — is this an ongoing operating cost, or a major periodic one?

Money should not drift casually between the two. Topping up a depleted admin fund from the sinking fund robs tomorrow's capital works to pay today's running costs, and it is exactly how schemes end up unable to fund a repaint they have known about for years. For a fuller breakdown, see sinking fund vs capital works fund.

What a sinking fund pays for

A sinking fund pays for the big-ticket items that keep a building standing, safe and weathertight. The usual suspects are the roof and waterproofing (membranes, gutters, box gutters and balcony decks), lift replacement or major modernisation, façade works including cladding, rendering and concrete spalling repairs, and full external repainting.

It also covers the safety and compliance systems that owners rarely think about until they fail an audit: fire detection and sprinkler systems, fire doors, emergency lighting, and essential safety measures that must be maintained to legislated standards. Common plant — pumps, hot-water systems, ventilation, car-park gates, intercoms and security — sits here too once it reaches replacement rather than routine-service stage.

As a rule of thumb, if the item is part of the common property, costs thousands rather than hundreds, and is replaced on a multi-year cycle, it belongs in the sinking fund. Working out the right total for your building is a separate question — see how much should be in a sinking fund — and you can model your own numbers with the sinking fund calculator.

How a sinking fund is funded

The fund is built up from owner contributions — the sinking fund levy — set each year at the annual general meeting and collected alongside the admin fund levy, usually quarterly. Each owner's share is generally worked out by lot entitlement (the unit-of-entitlement or liability figure on the plan), so larger lots typically pay more.

The contribution amount should come from the scheme's forecast, not a finger in the air. A sound forecast lists each major asset, estimates when it will need work and what that work will cost in future dollars, and then sets a steady annual contribution that keeps the fund from running dry. Reviewing it regularly — ideally every year, and at least every few — keeps the figures honest as costs and conditions change.

Where a fund falls short, committees have limited options: raise a one-off special levy, borrow through a strata loan, or defer the works. Each is a worse outcome than simply having saved enough, which is the whole point of running the fund properly in the first place. See the forecasting software for how a living plan keeps contributions on track, or book a demo to see it applied to a real building.

What it's called in each state

"Sinking fund" is the everyday term most Australians use, but the legal name depends on where the building is. In New South Wales it is the capital works fund, renamed from "sinking fund" by the strata reforms of 2015. In Victoria the Owners Corporations Act 2006 frames it as a maintenance fund backed by a maintenance plan, which prescribed (larger) owners corporations are required to prepare and which sets the basis for contributions.

In Queensland it remains the sinking fund, supported by a sinking fund forecast of at least nine to ten years. In Western Australia it is the reserve fund; in South Australia community and strata schemes work to a forward budget that performs much the same role. The Northern Territory and the ACT use their own terms again.

The labels differ but the principle is identical everywhere: a dedicated pool of money, built from regular contributions, that pays for major works so they don't have to be paid for in a single hit. If you manage buildings across more than one state, software that handles the differing terminology and forecast rules in one place saves a great deal of translation.

Common questions

Is a sinking fund the same as a capital works fund?: Yes — they are the same thing under different names. "Capital works fund" is the legal term in New South Wales since 2015; "sinking fund" is the term in Queensland and the common name used nationally. Both refer to the fund that saves for major, periodic repairs and replacements.
What's the difference between the sinking fund and the admin fund?: The admin fund covers recurring day-to-day costs — insurance, cleaning, gardening, management fees and minor repairs. The sinking fund covers large, irregular capital works such as the roof, lifts, façade and repainting. They are kept as separate accounts and money should not be shuffled freely between them.
How much should be in a sinking fund?: There is no single right figure — it depends on the building's age, the assets it has, and what major works are coming and when. The amount should be driven by a sinking fund forecast that lists each asset and its replacement timing, then sets contributions to keep the fund solvent.
Who decides the sinking fund levy?: Owners set it by vote at the annual general meeting, usually on the strata committee's or manager's recommendation. The figure should come from the scheme's forecast or maintenance plan, and is then collected from owners by lot entitlement, typically each quarter alongside the admin fund levy.
What happens if the sinking fund runs out?: If a major repair is due and the fund can't cover it, the scheme usually has to raise a special levy — a one-off charge on every owner — or take out a strata loan, or delay the works. All three are worse than having saved enough in advance, which is exactly what a well-managed sinking fund is designed to avoid.

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