Body corporate management companies (strata managers) sit at the intersection of property services and trust accounting. The bookkeeping is more complex than it first appears: the manager has their own trading income, but simultaneously holds and administers funds belonging to the owners corporations (OC) they manage. Getting these two accounting streams confused — or allowing them to touch — creates legal as well as accounting problems.
The Manager's Revenue: Management Fees Are Taxable Income
A body corporate manager earns income by charging the owners corporation a management fee for its services. This fee is ordinary income of the manager's business and is a taxable supply subject to GST. The manager must issue a tax invoice to the OC each billing period, charge GST at 10%, and account for the GST in the manager's BAS.
The management fee is not levy income. Levy income is the money collected from lot owners to fund the OC's operations — it belongs to the OC, not to the manager. The mutuality principle applies to the OC (see below), not to the manager. A bookkeeper who confuses the management fee with the levy income will overstate the manager's revenue and create a misleading picture of the business.
Fee structures vary: some managers charge a fixed annual fee per scheme, others charge a percentage of levies raised, others bill on a per-lot basis, and many use a combination. Where fee components have different GST treatments (which is unusual — management services are consistently taxable), they should be invoiced separately.
Trust Accounting for OC Funds
This is the area that generates the most compliance risk. In most Australian states, body corporate managers are required to hold OC funds in a statutory trust account separate from the manager's own operating accounts. The trust account holds:
- Levy collections received from lot owners
- Administrative fund and sinking fund contributions
- Insurance proceeds belonging to the OC
- Any other amounts held on behalf of the OC
These funds are not the manager's money. They cannot be used for the manager's operating expenses, cannot be drawn on to cover the manager's cash flow shortfalls, and cannot be commingled with the manager's own bank accounts. Commingling is a licensable offence under state property agent and strata management legislation.
State licensing legislation — including the Property and Stock Agents Act 2002 (NSW), the Owners Corporations Act 2006 (Vic), and the Body Corporate and Community Management Act 1997 (Qld) — imposes specific trust account obligations. These typically include requirements to:
- Maintain a separate trust account at an approved bank
- Reconcile the trust account monthly
- Keep trust accounting records for five years
- Submit to an annual trust account audit in some jurisdictions
A bookkeeper who finds that a client is operating a body corporate management business without a trust account framework — running OC levy receipts through the manager's operating bank account — should escalate this immediately. The consequences of non-compliance include licence suspension, civil liability, and professional penalties.
Managing Multiple OC Engagements
Body corporate managers typically manage dozens, sometimes hundreds, of schemes simultaneously. Each scheme is a separate legal entity (an incorporated owners corporation under state legislation), and its funds must be segregated within the trust account structure.
In practice, this is achieved through sub-accounts or coded ledger entries within the manager's trust accounting software — platforms like StrataMax, Strataware, or MRI Strata (formerly StrataConnex) provide per-scheme sub-ledgers. Each scheme has its own receivables (levy debtors), payables (contractors), and fund balances (administrative fund and sinking fund), all held within the manager's master trust account.
The manager's own P&L shows only:
- Management fees earned from each OC (income)
- The manager's own operating costs (salary, office rent, software, insurance, professional fees)
It does not include the aggregate levy income of all OCs managed, nor the aggregate expenditure from OC funds. Those amounts appear in each OC's own financial statements, which the manager prepares separately as a service to the OC.
GST on Management Fees and Services
All body corporate management services are taxable supplies. The management fee, any separate charges for additional services (AGM preparation, maintenance coordination, dispute liaison), and any disbursements recharged at cost-plus-margin are all subject to GST.
Where the manager recharges a third-party cost — for example, a contractor invoice for common area maintenance — the treatment depends on structure. If the manager contracts with the contractor in their own name and recharges the OC, the manager makes a taxable supply to the OC and the recharge should include GST. If the manager contracts as agent for the OC (with the OC as the contracting party), no supply is made by the manager, and the contractor's invoice goes directly to the OC. Most managers contract in their own name as principal, making the first treatment more common.
Strata Manager Licensing and Deductible Costs
Strata management licensing requirements vary by state, but licence fees, continuing professional development (CPD) costs, and professional membership fees (such as Strata Community Association membership) are deductible for the manager as expenses incurred in carrying on the business.
Where the licence is held by an individual employee (as is common — the individual holds the licence, the company holds a corporation licence or operates under the individual's supervision), the individual's licence fee is deductible either as a self-education expense (if the licence requires ongoing education) or as a business expense of the employing entity if the employer pays it.