Retirement village budgets

Retirement village operators must follow a set process for budgets and financial reporting. 

The process gives residents the opportunity to:

• give feedback on proposed budgets
• understand how village funds are used.

Key budget dates

• Before 1 April: give residents meeting notice and budget documents
• Before 1 May: hold the annual budget preparation meeting
• Before 1 July: hold the annual budget finalisation meeting
• 1 November, 1 February, 1 May and 1 August: provide quarterly financial statements
• Before 1 December: hold the annual financial statements meeting. You may need to arrange for an audit of annual financial statement.

You must prepare separate budgets for each retirement village you run.

The budget processes infographic for a summary of the budget requirements.

Residents' involvement in the budget

Residents have the right to:

• receive annual budget documents
• attend and take part in budget meetings
• give feedback on proposed budgets
• receive quarterly and annual financial statements
• understand how recurrent charges are calculated
• have an explanation for significant variations between proposed and actual budgets
• vote on certain financial matters by special resolutions.

Residents can give feedback on the proposed budget, but they do not approve the budget. 

Budget documents

The proposed budget documents must clearly show:

• income from residents
• income from other sources
• insurance costs
• management and administration fees
• staff costs
• finance costs
• capital maintenance expenditure
• capital replacement expenditure
• opening and closing fund balances
• projected surplus or deficit.

Supporting information

You must give residents any information they need to understand the proposed budget. This may include:

• Information about actual expenditure
• reasons for proposed charge increases
• reasons for changes to services or amenities.

Budget preparation meeting

You must hold a budget preparation meeting before 1 May each year. 

The purpose of the budget preparation meeting is to:

• consult residents about the proposed budgets
• receive residents' feedback
• discuss proposed expenditure and charges

No other business is to be conducted at the annual budget preparation meeting. 

Notice of budget meetings

You must give notice to the residents' committee (or the finance subcommittee), if there is one, or to all residents: 

• before 1 April each year
• at least 30 days' before the annual budget preparation meeting. 

The notice must include the:

• resident’s right to attend and participate in the annual budget preparation and finalisation meetings
• date, time and place of each meeting
• matters for discussion, including any special resolutions.

You must give residents the full draft budget documents on or before the day the meeting notice is given. 

You can give the residents the draft budget documents by:

• email
• resident portal
• hard copy.

Budget finalisation meeting

You must hold an annual budget finalisation meeting:

• before 1 July each year, and 
• at least 50 days after the budget preparation meeting. 

At the meeting you must:

• present final budget documents
• explain the proposed budget to residents
• allow residents to give feedback 
• explain how village funds are expected to be used in the next financial year.

Quarterly financial statements

You must give residents a financial statement each quarter. The statement shows the village's income and spending. 

The statements must include:

• operating income and expenditure
• capital maintenance income and expenditure 
• capital replacement income and expenditure. 

You must explain any difference of 10% or more between the actual expenditure and budgeted expenditure. 

When to provide quarterly statements

Annual financial statements

You must give residents an annual financial statement for the previous financial year. 

The statement must show:

• the village's actual income and expenditure
• an explanation for any difference in expenditure of 10% or more from the proposed budget. 

Audit reports

An annual financial statement must generally include an audit report prepared by a qualified auditor. 

Residents can vote by special resolution to choose not to have the financial statements audited for the following year. 

Annual financial statement meeting

You must hold an annual financial statement meeting before 1 December each year. You must give residents notice to residents of this meeting before 1 November. 

At this meeting: 

• the annual financial statement is presented and explained
• residents can give feedback
• residents can vote on whether the following year's statement must be audited.

Budget surplus

You must use a budget surplus for the village’s future operating expenses.

Residents can decide by special resolution to use all or part of the surplus for another purpose benefiting residents.

Budget deficits

You must cover any deficit shown in the annual financial statement.

You cannot cover the deficit by:

• charging residents a special levy 
• increasing recurrent charges 
• using recurrent charges already collected 
• using money from the capital maintenance fund  
• using money from the capital replacement fund 

You also cannot carry the deficit into a future year or charge residents interest on the deficit.