Sunday, 05th July 2020

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Denis Twomey
Last seen: 8 years 10 weeks ago
Joined: 27/04/2012

According to the Stratalive webpage, a discount of 20% for prompt payment of corporate levies can be allowed for by merely
'grossing up' the amount by 20% and then deducting this 20% for early payment. This is mathematically incorrect. To accommodate a 20% discount, the base amount must be increased by 25%. Example : Base amount = $100. Add on 25% = $125.
Now decrease this by 20% = $100. If the increased amount is only $20 and the discount offered is also $20, the discount expressed as a percentage is only 16-and-two-thirds %. This may seem fine. The trouble arises when the '20% discount' strategy is voted on, accepted, and written into the By-Laws of the Body Corporate - which makes it compulsory. This will result in a serious shortfall for the fund. Our AGM voted on a 20% discount yesterday, and we have been advised that our
levies will be increased by 20% to allow for this. I suggested that the levies will need to be increased by 25%, but this was
virtually laughed at. It will be interesting to see what happens when a prompt-payer unit owner takes the time to calculate whether he has received his full 20% discount, only to discover he has received only 16+ %.

Daniel Russell ...
Daniel Russell - Chambers Russell Lawyers's picture
Last seen: 6 years 3 days ago
Joined: 07/07/2010

Hi Denis,

You make a good point. It sounds like your funds would be 4% down on where they need to be, if everyone pays within the discount period.

Maybe I am misunderstanding your meaning, but I think perhaps, as to your last point, it is really the other way around? Isn't the prompt-payer going to be pleasantly surprised to discover that they have only paid 96% of the original, non-engrossed levy amount?

Best regards,
Daniel Russell
Mills Oakley Lawyers
[email protected]