Outgoings statement and auditor's report

 

ACT

See section 66. A lease providing for the payment by the tenant of outgoings must include a provision requiring the landlord to give the tenant a written report within 3 months after the end of the relevant accounting period.

Subject to section 66(4), the report must:

  • be prepared by an auditor on a cash accounting basis (unless the DS or lease provides for another accounting method) to be used;
  • contain details of the landlord's spending on outgoings that the tenant contributed to in the accounting period; and
  • include a statement by the auditor about whether or not:
    • the outgoings were recoverable outgoings; and
    • the outgoings the tenant contributed to were more than the amount spent by the landlord in the accounting period.

Under section 66(4), the report need not be prepared by an auditor (nor contain the auditor's statement) if the outgoings only relate to rates, other statutory charges, insurance and/or certain contributions under the Unit Titles (Management) Act 2011. A majority of tenants in a retail shopping centre may waive the requirement for an auditor's report (see section 72).

NSW

See sections 28-28A. The outgoings statement must detail all expenditure by a landlord (to which the tenant is required to contribute) in each accounting period and must be given to the tenant within 3 months of the end of the accounting period to which it relates.

If the shop is in an RSC, the statement must include:

  • details of the gross lettable area;
  • details of any material change in that gross lettable area to which the statement relates;
  • statement of total management fees;
  • statement of total cleaning costs; and
  • any other prescribed particulars.

The statement must be prepared in accordance with accounting standards and is to be accompanied by the auditor's report which is to be prepared by a registered company auditor.

The report must include a written statement by the auditor as to whether:

  • the outgoings statement correctly states the landlord's expenditure; and
  • estimated outgoings exceed actual outgoings.

The outgoings statement does not require an auditor's report if the statement does not relate to statutory outgoings, insurance and strata levies if it is accompanied with copies of all assessments, invoices and proof of payment.

A tenant is to be given a reasonable opportunity to make a written submission to the auditor about the accuracy of the landlord's outgoing statement.

A tenant is entitled to withhold payment of contributions for outgoings in certain circumstances.

NT

See section 40. The provisions are similar to those of NSW with the exception of the provision requiring RSCs to provide specifics of management fees and cleaning costs.

The provision of an auditor's report can be avoided if the outgoings statement only relates to water, sewerage and drainage rates and charges, council rates and charges and insurance premiums, and the landlord's statement is accompanied by copies of all assessments, invoices, receipts or other proofs of payment of those outgoings.

The outgoings statement may be a composite statement provided that each tenant to whom it relates is able to ascertain the required information that is relevant to that tenant.

QLD

See section 38B-38C. An auditor registered under the Corporations Act 2001 (Cth) must prepare an audited annual statement of outgoings in accordance with the Act.

The statement must contain things such as:

  • the auditor's opinion on whether the statement fairly reflects the landlord's outgoings;
  • a comparison between the estimate and the amount actually spent by the landlord; and
  • a comparison between the total amount spent and the amount paid by the tenant.

If the landlord does not provide an audited annual statement, the tenant may withhold payments on account of outgoings until the audited annual statement is provided.

SA

See section 32. Similar to NSW. However, the auditor's report must include a statement as to whether or not the amounts paid by the tenant for outgoings were properly payable. The report does not need to be audited where the tenant is only liable to payment of council rates, water and sewerage rates and insurance premiums provided receipts are provided with the report.

TAS

See section 19. A tenant may request a landlord to provide an audited report of outgoings for any "accounting year" (being an accounting year as set out in a lease or if not set out, a financial year). If requested a landlord is to provide a report within 3 months of the end of each accounting year.

A report is to contain a statement, prepared in accordance with recognised accounting principles showing:

  • whether the landlord's outgoings have been properly charged;
  • the manner in which they have been expended; and
  • whether the outgoings recoverable from the tenant exceed the amount incurred by the landlord.

If the landlord's statement is found by the auditor to be at least 95% accurate, the tenant is liable for the cost of the audit.

VIC

See section 47. The outgoings statement must be prepared in accordance with the Australian Accounting Standards Board and the year-end statement must be accompanied by a report prepared by a registered company auditor that states whether:

  • the statement correctly states the landlord's expenditure and each individual outgoing that comprises more than the prescribed percentage of the total amount of outgoings to which the tenant is liable to contribute; and
  • the total amount that the estimated outgoings for that period exceeded the total actual expenditure.

Outgoings statements are not required to be provided where council rates, insurance and the like are the only recoverable outgoings provided receipts of such outgoings are given.

WA

See section 12. Within 3 months after the end of an "accounting year" (being a financial year unless otherwise specified in the lease) the landlord must give the tenant an "operating expenses statement".

An operating expenses statement in respect of a retail shop in an RSC must detail the total lettable area (current and any material changes during the accounting period).

An operating expenses statement in respect of any retail shop lease:

  • must be prepared in accordance with applicable accounting standards made by the Australian Accounting Standards Board; and
  • may be a composite statement relating to more than 1 tenant, as long as a tenant can ascertain the required information relevant to it.

The statement (unless the statement relates to only certain rates, taxes and relevant authority payments and insurance costs) must be accompanied by a report on the statement prepared by a registered company auditor within the meaning of the Corporations Act 2001 (Cth) stating whether the operating expenses statement correctly states the expenditure and also whether the estimated operating expense exceeded the actual expenditure.

The landlord must pay half the audit costs.

Definitions and currency

 

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Currency of information by jurisdiction Definitions

ACT information current as at 1 January 2023

NSW information current as at 1 January 2023

NT information current as at 1 January 2023

QLD information current as at 1 January 2023

SA information current as at 1 January 2023

Tas information current as at 1 January 2023

Vic information current as at 11 April 2023

WA information current as at 1 January 2023

"CMR" means current market rent.

"CMV" means current market value.

"DS" means disclosure statement.

"NCAT" means the NSW Civil and Administrative Tribunal.

"QCAT" means Queensland Civil and Administrative Tribunal.

"RSC" means retail shopping centre.

"RTC" means retail tenancy claim.

"RTD" means retail tenancy dispute.

"SAT" means State Administrative Tribunal.

"SBC" means Small Business Commissioner.

"SRV" means specialist retail valuer.

"VCAT" means Victorian Civil and Administrative Tribunal.

"WA SAT" means the State Administrative Tribunal of Western Australia.