What is a capital works fund?

The capital works fund (formerly the sinking fund) is money an owners corporation sets aside for major, non-routine expenditure such as painting, roofing, waterproofing, lift replacement and other capital items. Day-to-day running costs come from the separate administration fund.

How much should be in a capital works fund?

There is no fixed figure. The balance is only meaningful compared to the building's 10-year capital works plan: if the next few years of forecast work cost far more than the fund holds, the shortfall is likely to become a special levy.

What is the difference between a capital works fund and a sinking fund?

They are the same thing. 'Sinking fund' is the older term, still widely used in conversation and in some documents; NSW legislation renamed it the capital works fund.

Guides

The capital works fund, explained

Australian strata · updated 2026

If you read only one number in a strata report, most professionals would tell you to read this one. The capital works fund is the building's savings account for major repairs — and whether it's adequate largely determines whether you'll face special levies after you move in.

What it is

An owners corporation runs two funds. The administration fund pays the ordinary running costs: insurance premiums, cleaning, gardening, minor repairs, the strata manager's fee. The capital works fund — called the sinking fund before the terminology changed, and still called that by almost everyone — is for major, infrequent, expensive work: repainting, roof replacement, waterproofing, lifts, common-area refurbishment.

Your quarterly levies are split between the two. The capital works portion is, in effect, saving for repairs that haven't happened yet.

How much is enough?

There is no universal number, and any rule of thumb you're offered ("$X per lot") is close to meaningless on its own. $80,000 is comfortable for a twelve-unit walk-up and inadequate for a forty-unit tower with two lifts due for replacement.

The comparison that actually works is against the building's own plan.

The test: take the capital works fund balance, then look at the next three years of the 10-year capital works plan. If planned spending materially exceeds the balance — and levies aren't rising to close the gap — the shortfall has to come from somewhere. That somewhere is usually a special levy on owners, including the new one.

The 10-year plan

NSW schemes are required to have a capital works fund plan covering ten years, and to review it at least every five. It lists anticipated work by year with estimated costs.

Three things are worth checking about the plan itself:

Does it exist, and when was it prepared? A plan written eight years ago is using construction costs that no longer apply.
Who prepared it? A plan by a quantity surveyor carries more weight than a self-assessment by the committee.
Is the work costed? A schedule of items with no dollar figures can't tell you whether the fund is adequate.

Reading the balance in context

What you see	What it suggests
Healthy balance, modest near-term plan	The building has saved for its maintenance. The strongest position.
Healthy balance, heavy near-term plan	Check the arithmetic — a large fund can still be short of a repaint plus a lift.
Thin balance, light plan	Possibly fine for a small, new building. Ask whether the plan is realistic.
Thin balance, heavy plan	The gap is a future levy. Try to size it before you commit.
Fund in deficit	Serious. The scheme has spent beyond its means and levies are almost certain.
Repeated special levies in the minutes	The clearest signal that the fund model isn't working in practice.

A note on new buildings

A brand-new scheme will have a small capital works fund simply because it hasn't been collecting long — that's expected, not alarming. The risk in a new building is different: defects emerging in the first few years, and whether the owners corporation is pursuing the builder within the statutory warranty period.

Working it out for your report

NuData Strata pulls both fund balances, the levy history and the costed items from the capital works plan, and compares the near-term forecast spending against the fund — with every figure linked to the page it came from.

Check your building's fund