Collection and payment of building permit levy
It is the responsibility of the Registered Building Surveyor (RBS) to report all building permits issued and forward the collected amounts of building permit levy to the VBA.
Building surveyors are required to pay the VBA all amounts of building permit levy received for building permits issued during a given month. A building surveyor must refuse an application for a building permit if the applicant does not pay the building permit levy.
- cheques are to be made payable to the Victorian Building Authority. Cheques drawn by third parties (clients) will no longer be accepted towards payment of the amount of building permit levy (including HIH levy payable) by the relevant building surveyor into the Building Administration Fund.
- a direct credit facility (electronic funds transfer) is available for building surveyors to pay the levy each month. Building surveyors are required to contact the VBA for an organisation identification code to enable these transactions to be processed. Before using this payment method, please contact the VBA's Levy Section on 1300 815 127 or email firstname.lastname@example.org
The building permit levy is not payable if the cost of building work is $10,000 or less.
Where the cost of the building work is greater than $10,000, the Building Act 1993 requires a building permit levy of 0.128 cents in every dollar of the cost of building work, comprising of:
- 0.064 cents to fund the building control system in Victoria.
- 0.064 cents to fund the dispute resolution service, Building Advice and Conciliation Victoria.
Note: In 2001, the House Contracts Guarantee (HIH) Act 2001 provided for the collection of a HIH levy of 0.032 cents in every dollar of the cost of domestic building work. The HIH levy was repealed on 30 June 2010, but is still applicable in some circumstances. For example, where a building permit issued before this date is the subject of an amendment.
Application of the building permit levy
A building permit levy is payable before a building permit is issued. This includes where a:
- new building permit is issued to replace a lapsed building permit. Under the Building Act 1993, a replacement building permit is regarded as a new permit. As such, the balance of the cost of building work to be completed should be included on the building permit and the appropriate levy paid
- new building permit is issued due to substantial changes in the nature and type of building work on the original building permit
- building permit is amended and results in a change to the cost of building work, the balance of the cost of building work to be completed should be included on the building permit application and the appropriate levy paid building permit is issued for building work that may not normally require a building permit.
Applicant's liability to pay
The building permit levy is payable by the applicant for the building permit and must be paid before the building permit can be issued (section 205G(3), of the Act).
Legal obligations of the RBS
The legal obligations of building surveyors in the collection and payment of the building permit levy to the Victorian Building Authority Fund are:
- a building surveyor must not issue a building permit until the levy is paid;
- payment for levy by cheque is not regarded as received by the building surveyor until such time as the cheque has cleared.
Building surveyors should ensure cheque payments are honoured before the building permit is issued.
Levy calculation and rounding policy
Building surveyors may adopt a commercially realistic approach in the calculation of the building permit levy. The following rounding policy has been developed as the preferred rounding practice for all building surveyor.
The calculation of the building permit levy payable may be rounded as follows:
Final cent figure is 1, 2, 3 or 4
Round down to 0.
Example: $201.83 is rounded to $201.80
Final cent figure is 6, 7, 8 or 9
Round down to 5.
Example: $158.98 is rounded to $158.95
The rounding policy also applies to the calculation of the total amount of levy payable in respect of a monthly building permit levy return.
A building surveyor who receives an amount for the levy and issues a building permit must:
- forward a monthly return to the VBA, providing details of all building permits issued; and
- pay the levy (in accordance with Section 205J(1) of the Act).
The monthly levy return is due to be lodged, and the levy paid, on or before the 7th day of the month following the month to which the return relates.
For example, the February Levy Return is due to be lodged with the VBA and paid on or before 7 March.
Building surveyors are required to include in the building permit levy return details of all building permits issued during the month, including those building permits where there is no levy payable.
Only the amounts of building permit levy received in respect of building permits issued during that month are to be included in the building permit levy return.
Requirement to forward levy to the VBA
The Building Regulations 2006 prescribe the requirements of building surveyors who receive an amount of levy under section 205G of the Act.
Building surveyors must:
- record the date and amount of building permit levy received (regulation 321); and
- pay all amounts received for building permits issued during that month into the Victorian Building Authority Fund within 7 days after the end of that month (regulation 321)
Cheques drawn by third parties (applicants) are not accepted towards payment of the amount of building permit levy by the relevant building surveyor into the Victorian Building Authority Fund.
Managing the collection and payment of the building permit levy
The RBS collects building permit levy on the basis that it is to be forwarded to the VBA to be deposited into the Victorian Building Authority Fund. The RBS, as agent of the VBA, collects the levy which is essentially held in escrow, to be forwarded to the VBA by the prescribed date.
For effective management of the levy collection process it is recommended that a regular reconciliation is undertaken to ensure that the correct levy is reported and paid to the VBA. It is necessary to identify levy paid relating to pending applications (not forwarded to the VBA until the permit is issued), levy paid and building permit issued (to be forwarded to the VBA), and applications that did not proceed (to be reimbursed to applicant where the levy was paid to the RBS).
Inappropriate use of levy funds
Instances have been noted where building surveyors have failed to forward the monthly levy return payment by the due date, or have withheld certain building permits, and have instead used the levy funds to supplement cash flows in their business. The use of levy funds in this manner is unacceptable and contrary to the professional responsibilities of a building surveyor.
The VBA monitors the failure to include all building permits in the correct levy return, to lodge levy returns or make the total levy payment by the due date. A review of a building surveyor's building permit levy management processes is included in the levy audit program.
Instances of inappropriate use of levy funds will be investigated and where appropriate matters will be referred for disciplinary or criminal sanction.
Being unable to pay the levy to the VBA under the levy return process, due to non-payment by the applicant, is not accepted. A building permit cannot be issued until the levy is paid.Failure to make levy payments as required may also mean that recovery action is commenced for amounts outstand
Reimbursement (refund) of building permit levy
A reimbursement of the building permit levy is allowable only in circumstances where the levy was paid prior to the issue of the permit and the application is withdrawn prior to the issue of the building permit.
It is the responsibility of building surveyors to reimburse their client if the building permit levy is overpaid.
Note: In the following circumstances, the building permit levy is payable and no reimbursement is applicable:
- building work does not proceed
- partial completion of the building work
- building permit lapses; and
- cancellation of the building permit.