If you’re planning a construction or building project in New South Wales (NSW), you might come across the Long Service Levy, which applies to building and construction work. 

This levy is designed to support long-service benefits for workers in the construction industry, and it applies to projects that meet certain criteria. Understanding how the levy works and how to calculate it can help you budget more effectively and ensure compliance with NSW regulations.

This guide will walk you through the long service levy, who needs to pay it, how it’s calculated, and how you can make payments. We’ll also discuss some common questions people have about the levy and provide practical tips to make the process smoother.

What Is the Long Service Levy in the Building and Construction Industry?

The Long Service Levy is a fee imposed on building and construction projects in NSW that are worth $250,000 or more (including GST). The levy is set at 0.25% of the total project cost and must be paid before construction. It’s collected by the Long Service Corporation, which administers a scheme allowing workers in the construction industry to accumulate long service benefits over time, even if they switch employers frequently.

The construction industry is unique because workers often move between different employers as projects begin and end. The levy helps ensure that these workers can still receive long service entitlements after ten years of service in the industry.

Why Is This Levy Needed?

In industries like construction, where workers often change employers, they need help to qualify for long service leave. The levy addresses this issue by creating a portable long service leave scheme. This means that workers can build up their long service leave entitlements based on their time in the industry rather than needing continuous employment with one company.

Levy Details

The Long Service Levy is a charge the NSW Government imposes on building and construction works valued at $250,000 or more. The levy rate is set at 0.25% of the total cost of the building and construction works, including GST. This levy is paid into a fund administered by the Long Service Corporation (LSC), which provides a portable long service benefit for eligible workers in the building and construction industry.

The levy is calculated as a percentage of the cost of building work, which is determined by the local council, an accredited certifier, or a relevant government authority. The responsibility for paying the levy falls on the person or entity responsible for the project, which could be the project owner, employer, or an independent contractor.

 Importantly, the levy must be paid before any building work can commence to ensure compliance with NSW regulations.

Who Needs to Pay the Long Service Levy?

The responsibility for paying the levy falls on anyone applying for building approval for a building or construction project valued at $250,000 or more. This could include:

• Property owners
• Developers
• Contractors working on behalf of government bodies

Are There Any Exemptions?

Certain groups may be eligible for exemptions or reductions in the amount they need to pay. These include:

• Owner-builders: If you’re managing your own construction project as an owner-builder, you may qualify for a discount.
• Non-profit organisations: Charitable or non-profit organisations may also be entitled to a reduction.
• Religious institutions: Churches and other religious bodies may receive up to a 50% discount if they meet specific criteria.

These exemptions are generally based on factors such as voluntary labour contributions or the nature of the organisation.

How Is the Long Service Levy Calculated?

The levy is calculated as 0.25% of the total project cost, including GST. For example, if your project costs $500,000, you would calculate your levy by multiplying that amount by 0.0025:

500,000×0.0025=1,250

This means you would owe $1,250 in Long Service Levy payments.

For clarity, here’s a table showing how much you would need to pay based on different project values:

No levy payment is required if your project costs less than $250,000 (including GST). In some cases, you may be eligible for a full or partial levy refund.

Using an Online Calculator

To simplify this process, online tools allow you to input your project’s total cost and receive an instant calculation of your levy payment. These calculators can be found on official NSW government websites like Service NSW, or through private certifiers who handle building approvals.

How Do You Pay the Long Service Levy?

Paying the levy is straightforward once you’ve calculated how much you owe. Payments can be made online via your MyServiceNSW Account, or directly through local councils if they are authorised to collect payments.

If your project was approved by a private certifier instead of a local council, you must pay directly through the Long Service Corporation’s portal.

What Information Do You Need to Make a Payment?

Before making your payment, ensure you have all the necessary details ready:

• The development consent number or complying development certificate number.
• The total cost of your project (including GST).
• A credit card or debit card for payment.

After completing your payment online or through other authorised channels, you’ll receive a receipt that can be submitted with your building application.

Can You Get a Refund?

Yes! Refunds are available under certain circumstances:

• If your project doesn’t proceed and your building approval lapses.
• If you overpaid or made duplicate payments.
• If you’re eligible for an exemption but didn’t apply at the time of payment (e.g., owner-builders).

This ensures that workers can still receive their long service leave entitlement even if the project does not proceed.

Refund applications must be submitted within 12 months of making the original payment.

Long Service Leave Entitlements

Long service leave entitlements are a significant benefit provided to eligible workers in the building and construction industry through the Long Service Levy scheme. This scheme offers a portable long service benefit, allowing workers to accrue long service leave entitlements even if they work on different projects for multiple employers over time.

To qualify for long service leave entitlements, workers must have been employed in the building and construction industry for an uninterrupted period of 10 years. This benefit ensures that workers who have dedicated a long period to the industry can enjoy long service leave, regardless of the number of employers they have worked for. 

The Long Service Corporation (LSC) is responsible for administering these benefits, ensuring that workers receive their entitlements after meeting the eligibility criteria.

Compliance and Enforcement

The Long Service Corporation (LSC) is crucial in administering the Long Service Levy scheme and ensuring compliance with the Building and Construction Industry Long Service Payments Act 1986. 

The LSC conducts regular checks to verify the payment of the long service levy and may impose penalties or additional levies if a levy has been underpaid, paid late, or not paid at all.

Employers and contractors in the building and construction industry are required to comply with the levy requirements and make the necessary payments on behalf of their employees. Failure to adhere to these requirements can result in significant penalties and fines. 

To assist employers and contractors in understanding their obligations, the LSC provides comprehensive information and resources, helping them to comply with the levy requirements and avoid any potential penalties.

Key Takeaways

• The Long Service Levy applies to all NSW building projects valued at $250,000 or more.
• The rate is set at 0.25% of the total project value (including GST).
• Owner-builders and non-profits may qualify for discounts.
• Payments must be made before starting construction.
• Refunds are available if work doesn’t proceed or if overpayment occurs.

FAQs

What Happens If I Don’t Pay the Levy?

There could be significant consequences if you don’t pay before starting work on your project. Local councils and private certifiers must ensure that all levies have been paid before issuing construction certificates (CC) or complying development certificates (CDC). Failing to pay could result in fines or delays in getting your project’s approval.

Can I Get an Exemption from Paying?

Yes! Certain groups such as owner-builders and non-profit organisations may qualify for partial exemptions from paying the full amount of the levy. These discounts are typically based on factors like voluntary labour contributions or charitable status. If you’re eligible for an exemption but didn’t apply when paying initially, you can still request a refund within 12 months.

How Do I Calculate My Levy If My Project Includes GST?

The calculation includes GST in its total cost figure. For example, if your project costs $300,000, including GST, then multiply that figure by 0.0025:

300,000×0.0025=750

This means you’d owe $750 in Long Service Levy payments.

Where Can I Find More Information About Paying My Levy?

For more details on how much you need to pay and how to make payments correctly, visit official NSW government websites such as Service NSW, contact your local council directly or speak with a private certifier handling your building approvals.