The Housing Code of the Russian Federation provides for the possibility of paying remuneration to the chairman and members of the board of the HOA. And if, for example, in the case of concluding an employment contract with the chairman of the HOA, the procedure for paying insurance premiums and personal income tax from the chairman’s salary does not raise any special questions, then in the absence of employment contracts, the relevance of such issues increases significantly.
In this article we will examine the issues of the size and frequency of payment of remuneration, the method of receiving it, the obligation to pay insurance premiums and personal income tax and the determination of the person obliged to make such payments (and the corresponding deductions). Additionally, we will discuss the issue of indexing pensions for members and chairmen of the HOA board who are pensioners, and also consider the issue of paying bonuses to the chairman and members of the HOA board.
In what form does he receive payment?
The chairman, like all other members of the board, is not paid a salary, but a reward for the work he has done. This happens because a board member cannot work in this HOA under an employment contract. This is regulated by Article 147 of the LC. Accordingly, he cannot receive a salary.
Moreover, the amount of remuneration in different months may vary, since it depends on what work was performed during this period. The chairman is paid a certain share of these expenses.
Reference: This procedure arose in 2011, after amendments were made to the Housing Code. Previously, in a number of cases, employment contracts were concluded with chairmen.
Salary taxation
Remuneration of the chairman of the HOA - what taxes are it subject to? As you know, any salary is subject to a number of taxes before it reaches its recipient directly.
Therefore, the activities of the chairman, namely the remuneration for it, are also taxable.
However, you should not think that the activities of the head of the HOA are subject to any special taxes. No, personal income tax is also applied to it, and 13% will be deducted from the amount in favor of the state.
The state cannot claim more from the amount due to the chairman monthly. However, for concealing his real income or artificially reducing it, the head of the HOA may also pay with criminal liability.
How is it determined?
Payments for performing duties are a percentage of the cost of work carried out in the house. Thus, the greater their volume and the chairman’s time spent, the more money he will receive. But often it is only symbolic.
The amount depends, among other things, on:
- the number of apartments existing in the building;
- how many responsibilities the chairman has.
Officially members of the board cannot work in the HOA under an employment contract (we discuss the nuances of concluding an employment contract between the chairman and the HOA in this material). But often the chairman actually performs the duties of an accountant (as well as other specialists). This, of course, should be reflected in the amount of remuneration. It can range from several thousand to several tens and even one hundred thousand rubles.
The basis for payment of remuneration will be the minutes of the meeting.
Job description
Each position has its own rules that must be followed. It does not matter at all what the chairman of the HOA receives - salary or remuneration, he must fulfill all the obligations assigned to him and know his rights.
- A person can serve as chairman for two years. After which elections take place again.
- The Chairman is obliged to comply with the laws of the country that are in force at the time of exercising his powers.
- A person holding a position has no right to be negligent in his own responsibilities or to put personal gain above the interests of the partnership.
- The chairman can give instructions to subordinates. It is important to remember that orders should not contradict local regulations and laws of our country.
- The chairman of the partnership must supervise the activities of the board and general council.
- The chairman can take initiative, which is aimed at improving the work of the HOA and the condition of the house.
- The person who holds the position can represent the interests of the partnership, but a power of attorney is not required.
Who installs?
According to Article 145 of the Housing Code, the amount of remuneration for all members of the board, including the chairman, is determined by the decision of the owners. A certain percentage of expenses is approved, which will go towards payment.
Subsequently, a specific amount is determined monthly at the HOA meeting based on this percentage and the expenses incurred. Since wages must be paid monthly, it is advisable to carry out this procedure once a month.
Note: These expenses should be included in the financial plan for the year along with the rest.
Legal status of the chairman of the HOA
The chairman is elected at a meeting - either a general meeting or a meeting of the board, depending on the charter of the HOA. His responsibilities are outlined in the job description, the organization’s charter, as well as the legislation of the Russian Federation.
The chairman’s task is to protect the interests of the owners in the house or houses under his control. As the Housing Code indicates in Article 149, the chairman is responsible for implementing decisions made by the board of the partnership, managing the work of the organization, developing regulations, as well as other functions. He usually has a large number of responsibilities.
At the same time, there is uncertainty as to whether the chairman of the HOA is an official: legislative instructions on this matter are contradictory. He has the right to sign financial documents, and if violations are discovered, he will not be held liable - this is the difference between his status and the heads of commercial enterprises.
But this does not mean that he cannot be held responsible for decisions made and violations in work - in other cases, the chairman can be brought to administrative and even criminal liability.
The chairman must regularly report on his activities - provide the documents required by the audit commission, as well as make an annual report to the general meeting. He should not make decisions against the interests of homeowners in the apartment building he manages, and is also responsible to them for ensuring that the necessary utility resources are delivered to them on time and in the required volumes, and that the HOA funds are spent wisely.
Note that instead of the chairman, similar functions can be performed by the manager of the HOA. The difference is that he will not have the status of an official, instead he is an employee.
A manager is hired if the building does not have a sufficiently competent resident who is willing to perform the functions described above as chairman of the HOA. The chairman of the partnership will also be responsible for its activities.
Where are the conditions stated?
The main conditions are specified in the Charter of the partnership.
The lowest and highest possible percentage are not established by law. The amount of payment for specific work must be recorded in the minutes of the meeting.
If information about the percentage of payments was not included in the Charter initially (or the amount changes), you will have to formalize its change. For this, it is also necessary to hold a meeting. On it, HOA members vote to add (or change) this item. A protocol is drawn up. If more than half of those eligible to vote took part and the result is positive, the information is written down in the document.
Documenting
To ensure that no questions arise regarding payments to the chairman, they must be fully correctly executed in accordance with all procedures established by law. And they are:
- After certain work is completed, the manager draws up a work completion certificate. It reflects what results were achieved, and how much money and time was spent on this, and what the role of the chairman was.
- A meeting is held monthly, most often this is a meeting of the board, and, among other things, the remuneration for the chairman is established at it based on the results of the analysis of the acts of work done.
- All this is recorded in the protocol, where permission is secured to withdraw a certain amount from the HOA’s current account, intended as a reward.
How to apply?
The procedure will be as follows:
- Notify the owners of the meeting (at least 10 days before it is held).
- At the meeting, residents get acquainted with the acts and cost of work on improvement of the house and surrounding area.
- Calculate the amount of remuneration (a certain percentage of the estimates).
- Hold a vote on whether the owners agree with the amount. It is necessary to draw up a protocol about this.
- The protocol with the consent of the HOA members is the basis for receiving money.
Note: at least half of the residents must take part in the voting. If the required number could not be collected, absentee voting can be held.
Taxes on remuneration
We all know that any income is subject to taxes. Chairman's remuneration is no exception. The person holding the post reports expenses to the tax office and provides information about remuneration there.
13% is subtracted from the total incentive amount and paid to the tax office. Only after tax has been deducted does the chairman have his salary in his hands.
Do I need to pay insurance premiums?
This must be done.
There are two options for paying it:
- The chairman himself does this by submitting documents.
- Payments are made by the HOA, and wages are reduced by the amount of contributions.
How exactly this happens must be written down in the Charter. In case of non-payment, the inspection authorities will be able to charge fees.
As a rule, payments are transferred once a year based on its results.
The functioning of the entire partnership directly depends on the work of the chairman of the HOA, and therefore, many questions arise regarding this position. The following publications from our experts can answer some of them:
- Can a candidate for HOA chairman not be the owner of the property or his tenant?
- How does the process of selecting the chairman of the HOA take place and is it documented?
- What is the procedure for changing the chairman of an HOA and how can the head delegate authority?
- Job descriptions of the chairman and manager of the HOA - what are the differences?
- The structure and content of the agreement with the HOA manager, as well as its sample.
Legislative regulations
All issues related to construction management fall under the jurisdiction of housing legislation . Therefore, it is not surprising that regarding payment one should also refer to this regulatory act.
Thus, Article 147 of the Housing Code tells us exactly how the leader is elected, which is also important for the overall picture of events.
The amount of payments also falls under the jurisdiction of housing legislation and is regulated by Article 145, namely part 2.
It is this norm that tells us exactly how the chairman’s monetary remuneration for performing any action is formed.
Now that we have established all the aspects that relate to the remuneration of the head of the board and have come to the conclusion that his work is paid through remuneration, it is time to figure out exactly how this remuneration is calculated, in what order, by whom specifically and in what amount.
Let us turn to this information in order to clearly understand how honest your homeowners association manager is with you.
You can find out in what cases it is necessary to inspect the financial and economic activities of an HOA by regulatory authorities from our article.
Utilities and housing services
Before you understand the salary of the chairman of the HOA, you need to understand what the income of any home consists of.
An apartment building is an economic facility with a whole network of engineering networks and communications that require regular and attentive attention.
Any apartment owner must pay utility bills on time . Part of the amount goes to pay for utilities consumed by the house over the past period, such as heating, hot and cold water supply, electricity and sanitation.
The second part of the payments goes to the maintenance of common property, as well as to the payment of labor to specialists hired to perform a particular type of work.
It is from this part that wages are paid to the employees of the management company or, if the house is managed by an HOA, to members of the board and the chairman of the HOA.
The overwhelming majority of ordinary people are sure that the work of the chairman of the HOA is not so significant that this item should be included in the column of house expenses. But if you take into account the entire volume of work performed and the time this activity requires, this position should be paid.
