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What is a Condominium Budget? How does the HST impact the Budget?
A Condominium Budget is made up of the Operating Budget for the operation expenses of the Condominium to include the Reserve Fund. The Budget will include all of the expenditures based on a fiscal year of operations. The key point for a Board of Directors is to ensure that enough maintenance fees are collected from all unit owners to cover the full years budget to ensure that the Corporation has enough funding to cover the fiscal year of expenditures.
Pie-Graph example of a normal $1.2 Million Dollar Condominium Budget. You will note the various expenditures and percentages of each. The highest percentage of costs relates to 1) Services 2) Utilities 3) Reserve Funds
Item #1 and #2 HST impacts Condo Operating Budgets. In the past service contracts would include a 5% GST however that has now changed with the introduction of the HST. All service contracts wil now have to include the increase to 13% Service contracts include: Property Management, Security, Cleaning & Maintenance, etc. When a normal 5% GST becomes an HST 13% all utilities bill are increased. The operating budgets for condominums has to cover expenditures for their fiscal year therefore maintenance fees must fall in line with the budget. Operating budgets increase as a result of inflation and higher costs relating to building operations and now with the additional HST, maintenance fees which are calculated as per square feet of a Condo Owners unit have to be increased. Another Item #3 is the Reserve Funds. These reserve funds were determine without HST on service related items. All reserve funds will be inadequate since they do not have a 13% HST fee included. Condo Corporations will have to top up their contributions to the Reserve Fund. |
