Sinking Fund vs Capital Works Fund: The Same Fund, Different Names

Across every Australian state and territory, an owners corporation (or body corporate) keeps two separate funds. The first covers ordinary running costs — insurance, cleaning, gardening, electricity for common areas, the manager's fee, minor repairs. The second sets money aside over years for major capital work that comes around once a decade or once a generation.

The day-to-day fund is the administrative fund in most schemes, or simply the operating budget. It is funded by regular levies sized to roughly match each year's expected spending, so it tends to start and finish the year close to zero.

The long-term fund is the one with all the different names. Whatever it is called in your state, the principle is identical: owners contribute steadily each year so the money is already there when a $200,000 roof or a $400,000 lift replacement falls due. That steady contribution is what a sinking fund is for, and working out the right number is exactly what a sinking fund calculator does.

Keeping the two funds separate is not optional bookkeeping. In most states the money in the long-term fund cannot legally be spent on day-to-day costs, and vice versa. Mixing them is one of the most common ways a building ends up underfunded for the work that actually matters.

New South Wales renamed the sinking fund to the capital works fund in 2015 under the Strata Schemes Management Act 2015. Older owners and documents may still say sinking fund; it is the same account. Alongside it sits the administrative fund for day-to-day spending.

Every NSW strata scheme must prepare and maintain a 10-year capital works fund plan that estimates the major work expected over the coming decade and the contributions needed to pay for it. The plan is meant to be reviewed and kept current, not written once and filed away.

From 2026, a mandatory standard form governs how new and updated capital works fund plans are prepared, bringing more consistency to what the plan must contain. Plinth's maintenance plan software is built to produce a plan in the structure NSW committees and managers are now expected to use.

Victoria uses different language again. Under the Owners Corporations Act 2006, the long-term fund is the maintenance fund and the forecast that drives it is the maintenance plan. The plan identifies major capital items, when they will need attention and the money to be set aside for them.

Victoria is also the jurisdiction where the obligation depends on the size of the scheme. Only Tier 1 owners corporations (more than 100 lots) and Tier 2 owners corporations (51 to 100 lots) are required to prepare a maintenance plan and hold a maintenance fund. Smaller owners corporations may choose to, and many do, because the logic of saving ahead does not change with lot count.

If your owners corporation is below the threshold, you are not required to hold a maintenance fund — but a building still ages at the same rate whether it has 40 lots or 140. Many smaller Victorian schemes adopt a maintenance plan voluntarily so they are not caught out by a large special levy.

Queensland keeps the traditional name. Under the Body Corporate and Community Management Act (BCCM), the long-term fund is the sinking fund, paired with a separate administrative fund for everyday costs.

Queensland bodies corporate must prepare a sinking fund forecast that looks ahead over the current financial year plus at least nine more — in practice, a rolling ten-year view. The forecast is used to set sinking fund contributions so the money accumulates ahead of the work.

Because the forecast has to be kept realistic year on year, a sinking fund forecast software tool that updates as costs and timing change is far more useful than a static spreadsheet that drifts out of date the moment it is signed off.

Western Australia calls its long-term fund the reserve fund, under the Strata Titles Act 1985. The intent matches every other state — set money aside for major repairs and replacement of common property rather than relying on one-off levies.

WA requires a 10-year plan for the reserve fund, and the obligation to hold one is mandatory for larger schemes. As elsewhere, smaller schemes are encouraged to plan ahead even where they are not strictly compelled to, because the cost of major work does not scale down just because the building is small.

South Australia also uses the term sinking fund, but pairs it with a forward budget rather than a fixed ten-year plan. The forward budget looks ahead over a shorter horizon than the decade-long plans seen in NSW, Queensland and WA.

The shorter planning window means SA schemes need to be especially disciplined about looking beyond the immediate budget cycle. A building component does not care which state it is in — a roof still has a 20-to-30-year life. Modelling the full life of major assets, even where the formal budget only spans a few years, is the difference between steady contributions and a sudden special levy.

The Australian Capital Territory uses the term sinking fund for its long-term fund, sitting alongside a general or administrative fund for day-to-day expenses. The structure mirrors the rest of the country: regular contributions build a reserve for major capital work over time.

As in every jurisdiction, the practical question for an ACT owners corporation is not what the fund is called but whether it holds enough. Working out how much should be in a sinking fund depends on the age and condition of the building, not the wording of the Act.

Capital works fund, maintenance fund, sinking fund, reserve fund — they are the same tool wearing different name tags. What separates a well-run building from one facing a nasty special levy is not the terminology, it is whether the fund is backed by a current, realistic forecast of the work ahead.

That is the whole point of a living maintenance plan: a forecast that is updated as costs, conditions and timing change, rather than a document prepared once and left to go stale. Plinth handles the terminology for your state automatically, so committees and managers can focus on the numbers that keep the building funded — whatever the law calls the fund.