The Long Service Levy NSW: The 0.25 Per Cent You Must Pay Before Work Starts

ONE MORE LEVY BEFORE YOUR BUILD CAN START.NSW: include the long service levy in pre-start costs.

Most statutory charges on a development announce themselves at the planning stage. The long service levy does not. It sits quietly in the pre-construction steps, it is charged as a percentage of the works, and the certificate that allows you to start building cannot be released until it is paid. Forgetting it rarely kills a project, but it does distort a cash flow at exactly the wrong moment.

The deal question: is your works value above the threshold?

The threshold is the trigger. The NSW Government's long service levy page records that the NSW Government charges the levy on all building and construction works of $250,000 or more, and that the levy rate is 0.25 per cent of the cost of building and construction works of $250,000 or more, including GST. Below that value, no levy is payable.

That puts almost every small residential development over the line, and it puts a renovation with a modest scope potentially under it. The value that matters is the cost of the works, so your quantity surveyor's cost plan, not your purchase price, is the base.

Who pays, and what it applies to

The page records that the levy is paid by the applicant for the building approval, or the person the work is being completed for, and that a contractor generally pays the levy if building work is done on behalf of the Crown, with differences where works are done by a body established by an Act of Parliament such as a council. On a private project the obligation sits with the applicant, which in practice means you or your development entity.

The scope is broader than residential construction. The page lists building work including major projects and infrastructure, civil construction such as roads and bridges, fuel, gas and water storage facilities, residential building, sewage, drainage and water treatment systems, and telecommunications and electrical distribution infrastructure. On a subdivision with civil works as well as dwellings, that breadth is why the levy is calculated on the whole works value rather than only on the houses.

The timing gate that catches people out

The most important line on the page is about sequencing. It records that building work can only start after the levy is paid, and that a council or accredited certifier can only release the construction certificate or complying development certificate after the levy is paid. In other words, the levy is not an invoice that arrives after mobilisation; it is a condition of the certificate that lets you mobilise.

That has a cash-flow consequence. If your finance settlement and your builder's start date are tight, an unpaid levy can sit between you and the certificate, and a delayed certificate can push the start date. It should be on the same checklist as the certifier appointment, not discovered by the builder on day one.

The feasibility test a capable student would run

• Calculate the levy from the cost plan. Apply 0.25 per cent to the works value including GST, and put the figure in your statutory charges, not in contingency.
• Confirm who lodges and pays. Establish whether the council or your private certifier collects the levy and what evidence of payment they need to release the certificate.
• Check exemptions and instalments before you rely on them. Exemptions exist in some circumstances, and instalments may be available for projects over $10 million that run beyond 12 months, but an instalment plan has to be applied for before work commences.
• Sequence it against the certificate and the start date. Treat the levy as a pre-construction gate in your program, with the payment method confirmed in advance.
• Check the penalty exposure. The page records that the Corporation runs regular checks and that failing to pay the correct levy before construction starts may result in fines, penalties or prosecution, which is a reputational and financial risk on top of the cash-flow one.

The trap: treating a small levy as below attention

Because the rate is small, the levy is easy to dismiss as immaterial. It is not immaterial if it blocks a certificate. The failure mode is not the money; it is the sequencing. A developer who leaves the levy to the last week before a start date, and then finds the payment has to clear before the certificate is released, has created a critical-path delay for a few thousand dollars of statutory charge. The Long Service Corporation administers the scheme and the levy portal, so the payment itself is straightforward once it is planned.

What you do not have to work out alone

You are not expected to interpret the Act or manage the payment mechanics yourself. Your council or private building certifier confirms the amount and what they need to release the certificate, the Long Service Corporation administers the levy and can confirm exemptions and instalments, and your accountant advises how the levy is treated in the project accounts. Your job is to have it in the budget and on the program ahead of the certificate, so a certain and small charge never becomes an uncertain delay.

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Photo: Cobblebank land subdivision, Wikimedia Commons, CC BY-SA 4.0.