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There is no shortage of advice about when property managers must legally do EOFY, end of month or EOM, and when to disburse to owners or landlords.
But what is often missing in action is evidence that supports this advice. And that creates uncertainty and misinformation. How agencies must legally conduct EOFY, EOM or when to disburse is set out in legislation. So let’s take a look at what the law really says, and what’s just Property Management folklore.
How agencies must legally conduct close of month or EOM
All Australian States and Territories have legislation which governs trust accounting obligations for property and letting agents. These include the obligation to reconcile the balance of the licensee’s trust account with the balance of the related cash book or other record, generally at the end of each calendar month.
In Queensland, end of month must be conducted after close of business on the last day of the month, and within five days following the end of the month. In other words, end of month can’t be closed on the last day of the month. It must be done between the first and fifth days of the following month.
In New South Wales, Northern Territory, South Australia, Tasmania, Victoria, and Western Australia, end of month must simply be completed after the close of business on the last day of the named (calendar) month. It must reflect the figures as they were at close of business. In New South Wales, this must be completed within 21 days of the end of that month. In Victoria, it is within 14 days, whereas in Western Australia, the requirement is simply for it to be completed ‘accurately and on time.’
An example from the Victorian legislation reads, 'An estate agent must complete a trust account reconciliation statement at the end of each named month, for the period from the first day of that named month to the last day of that named month,' s 26, Estate Agents (General, Accounts and Audit) Regulations 2008 (Vic).
In the ACT, while it remains best practice to close and reconcile each month as you would in other states and territories, the obligation is to report quarterly. The report must be filed as accurate at close of business on the last day of the calendar month for the quarter. Generally, agencies have up to 15 days to submit this report.
To find out the specific requirements that apply to you, we recommend reading:
In ACT: s 111 Agents Act 2003
In New South Wales: s 26(6) Property, Stock and Business Agents Regulation 2014
In Northern Territory: Agents Licensing Act 1979
In Queensland: s 17 (1) Agents Financial Administration Regulation 2014
In South Australia: s 20 Land Agents Regulation 2002
In Western Australia: s 68(6)(d) Real Estate and Business Agents Act 1978.
Among other end of financial year obligations, agencies who operate a trust account will generally send out financial year statements to everyone for whom they hold trust money (usually owners). If you generate these statements in Console Cloud, they will cover any income and outgoings incurred during the financial year.
According to the ATO, the Australian financial year runs from midnight July 1-midnight June 30 the following calendar year. This slight difference in time frames—between midnight and close of business—means that agencies should calculate end of month and end of financial year separately, in order to be 100% compliant with both federal and state legislation.
When an agency must disburse to an owner or landlord
While disbursement, EOM, and EOFY tend to go hand in hand, this is not prescribed in any law or regulation of any Australian State or Territory. Generally speaking, the frequency and time for disbursement is stipulated in the management agreement between an owner or landlord and the property agent.
Accordingly, the agreement between an agent or agency and the property owner will govern when an agency must disburse. In the absence of such an agreement, only Queensland’s Agents Financial Administration Act 2014 sets a default time frame for payment.
In Queensland: s 22(5) Agents Financial Administration Act 2014 states that, ‘The agent must pay an amount [from the trust account] ... to the person entitled to it, or someone else in accordance with the person’s written direction—(a) if the person asks, in writing, for the balance—within 14 days after receiving the request; or (b)if the person has not asked, in writing, for the balance—within 42 days after the transaction is finalised.’
Here’s what the remaining Australian States and Territories stipulate regarding disbursement of trust money.
In the ACT: s 107(1) Agents Act 2003 states that ‘A licensed agent commits an offence if the agent deals with trust money otherwise than as directed by the person for whom the money is held on trust. Maximum penalty: 100 penalty units.’
In New South Wales: s 86(1) Property, Stock and Business Agents Act 2002 provides simply that, ‘Money received for or on behalf of any person by a licensee in connection with the licensee’s business as a licensee: … (b) is to be paid to the person or disbursed as the person directs.’
In the Northern Territory: s 52(4) Agents Licensing Act 1979 holds that, ‘A licensed agent shall not withdraw money from a trust account... except for the purpose of... (b) payment to, or disbursement according to the directions in writing of, the person for whom, or on whose behalf, the money was received.’
In South Australia: s 14 Land Agents Act 1994 provides that money, ‘... may only be withdrawn from a trust account for the following purposes: (a) for payment to the person entitled to the money or for payment in accordance with the directions of that person.’
In Tasmania: s 8(1) Property Agents and Land Transactions Regulations 2017 provides, ‘A property agent who has trust money in a trust account must retain the money in the account until the money is paid—(a) to the person entitled to it; or (b) to the legal practitioner or licensed conveyancer of the person entitled to it; or (c) in accordance with the written directions of the person entitled to the money or his or her legal practitioner or licensed conveyancer.’
In Victoria: s 59(1) Estate Agents Act 1980 states that, ‘Every estate agent who… receives or holds any money on behalf of any person in respect of any transaction... or in trust pending the completion of any transaction… shall retain that money in that trust account until paid—(i) to the persons entitled thereto... or such persons' legal practitioners or at such persons' direction...’
In Western Australia: s 68(5) Real Estate And Business Agents Act 1978 holds that, ‘An agent shall pay moneys withdrawn from a trust account to the person or persons lawfully entitled or authorised to receive them.’
Why we decoupled EOM and disbursements to owners in Console Cloud
When our Console Cloud team were building the trust accounting functionality, they worked closely with Queensland’s Office of Fair Trading, as well as consulting with auditors and accountants in each Australian State and Territory. As we have seen, disbursements are governed by the agreement between the agency and the owner or landlord, whereas end of month reconciliations are governed by legislation.
The result of this consultation is a harmonised and highly compliant trust accounting system that decouples end of month and disbursements to owners.
Why we decoupled EOM and EOFY in Console Cloud
End of financial year and end of month have also been decoupled in Console Cloud. EOFY is calculated based on a midnight cut-off, whereas EOM is calculated based on figures as at close of business. Accordingly, reporting between the two should be separated, even if the figures reported in each may be similar.
We’ve made ultra-compliant trust accounting software
That’s why if you’re using Console Cloud, you’ll find little differences like these that will make your auditor happy. But decoupling EOM, EOFY and disbursements aren’t the only compliance features we’ve built to protect your business against risk. If you’d like to learn more, why not book a Console Cloud demo, or register for the Console Cloud Winter Release Webinar.
Summary of key trust accounting legislation
New South Wales