A payment schedule is a cash flow decision made before the first trade arrives on site. State law sets most of its limits, and those limits differ in every state and territory.
Vinnie Vecchio coaches builders across four countries. When he explains where bad cash flow starts, he begins with a million dollar project and a contract with eight claimable stages over a 12 month build.
“Meaning you get paid eight times over a 12 month period, which means there’s four months you won’t get paid,” he told our podcast. “Obviously that’s going to create a cash flow crunch.”
That gap is not a bank problem or a client problem. It is a function of how the contract is structured, and on a home build, much of that structure is set by state law before anyone signs.
Why does the payment schedule matter so much?
The timing problem is familiar to anyone who has run a build. Chris, a partner at insolvency firm Jirsch Sutherland, described the mismatch on our podcast. “You’re only getting your money from your customer once every 120 days, once every 90 days. But you’re paying the subbies every seven days, every fourteen. So you’ve got eight payment cycles out of your business for every one that comes in.”
Every week between claims, wages, supplier accounts and holding costs keep running. Toby Loft of procurement platform BuildGrid made the related point that the faster money comes back into the bank, the more of the margin a builder keeps at the end of the job.
What is the maximum deposit on a home building contract?
It depends on the state and the contract price. The table sets out the deposit caps and progress payment rules as they stand today.
| Jurisdiction | Maximum deposit | Progress payment rule |
|---|---|---|
| Queensland | 10% under $20,000; 5% at $20,000 or more; 20% where off site work is over 50% | Must directly relate to progress at the building site and be proportionate to the value of the work |
| New South Wales | 10% | Over $20,000, payments must follow completed stages or be backed by invoices for work done or costs incurred |
| Victoria | 10% under $20,000; 5% at $20,000 or more | Stage caps for lock up, fixing and all stage contracts; other major contracts must relate to progress; reforms by 31 March 2027 |
| Western Australia | 6.5% | Only genuine progress payments for work already performed |
| South Australia | $1,000 under $20,000; 5% at $20,000 or more | Only genuine progress payments for work already performed |
| Tasmania | 10% under $50,000; 5% at $50,000 or more; 20% where off site work is over 50% | Must directly relate to progress at the building site |
| Northern Territory | 5% | Standard stages, variable by approved form; payable only after each stage is complete |
| ACT | No statutory cap found | No statutory rule found in the Building Act or regulation |
Domestic building contracts. Thresholds: Qld rules apply over $3,300; the NSW deposit cap applies to all residential building contracts, with payment type rules over $20,000; Vic stage caps apply to major contracts over $10,000; WA over $7,500 and under $500,000; SA excludes minor domestic building work; Tas $20,000 or more; NT $25,000 or more. Sources: state legislation and regulators, as in force 26 October 2026.
Queensland’s rules sit in Schedule 1B of the QBCC Act 1991. Taking a deposit above the cap carries a maximum penalty of 100 penalty units. Claiming a progress payment that does not relate to work done on site carries 50.
Does every state prescribe the stages?
No, and this is where Vecchio’s fix meets the law. His remedy for the cash flow crunch is to bring the money forward, either with more stage claims or by claiming on percentage of completion. How far a builder can take that depends on where they build.
In Queensland, Western Australia, South Australia and Tasmania, the law does not set the stages. It sets the test: payments have to track work actually done. Within that test, the number of claims is a contract decision.
New South Wales is narrower above $20,000, where payments must either follow completion of a stage described in the contract or be for work done or costs incurred, backed by invoices.
The Northern Territory prescribes standard stages for residential contracts on detached homes: base 10 per cent, frame 20, enclosed 25, fixing 30 and practical completion 7, with the rest at the final stage. The parties can vary them using an approved form, provided at least 3 per cent is held to the end.
Victoria is the most prescriptive on stages. Under section 40 of the Domestic Building Contracts Act 1995, a contract to build all stages of a home is capped at 10 per cent at base, 15 at frame, 35 at lock up and 25 at fixing. Builders and owners can currently agree that the stages do not apply, using a prescribed warning and clause signed before the contract.
On a home build, much of the payment schedule is set by state law before anyone signs.
What changes in Victoria from March 2027?
The Domestic Building Contracts Amendment Act 2025 moves the deposit cap and stage table out of the Act and into regulations. It now commences by 31 March 2027 at the latest, unless proclaimed earlier, after the default date was moved from 1 December 2026.
Under draft regulations released for consultation in August, the deposit on a standard home build would rise to 10 per cent, a new site preparation stage of 5 per cent would be added, and lock up and fixing would fall to 30 and 20. The threshold for a major domestic building contract would rise from $10,000 to $20,000.
Two other changes matter more for cash flow. From commencement, the amended Act will cap what a builder can demand at the lower of the prescribed percentage and an amount that directly relates to progress. The current opt out is also replaced, and under the draft regulations the replacement route does not reach ordinary home builds. The final regulations have not yet been made.
What the lower of test means in Victoria
From commencement of the amended section 40, a builder must not demand, recover or retain more than the lower of two amounts: the prescribed percentage for the stage, or an amount that directly relates to the progress of the building work. Reaching a stage will no longer guarantee the full stage percentage if the work on site has not kept pace. Builders who claim on completed work will see little change. Claims that run ahead of site progress become a compliance issue, not a commercial one.
What happens when a builder takes more than the law allows?
The consequences go beyond a fine. In Victoria, an owner who has been asked for or paid a deposit above the cap may avoid the contract at any time before it is completed, under section 11 of the Act, unless VCAT considers that unfair. In Western Australia, an owner can terminate a contract made in breach of the deposit and progress payment rules.
In the Northern Territory, if a builder is found guilty of taking a payment in breach, a court can also order some or all of it refunded. The Territory bars any payment, deposit included, before the builder’s residential building insurance or fidelity certificate is in force and a copy has been given to the owner.
For a builder, that turns an aggressive payment schedule from a commercial argument into a contract risk.
Can a builder use security of payment against a home owner?
Generally not in Queensland or Victoria. Queensland’s Building Industry Fairness (Security of Payment) Act 2017 excludes domestic building work where a resident owner is a party. Victoria’s Act excludes domestic building contracts unless the owner is in the business of building homes and the contract is part of that business.
New South Wales is different. For contracts entered from 1 March 2021, builders can serve payment claims on owner occupiers. Security of payment schemes in the other jurisdictions were not reviewed for this article.
The Good Builder Take
Most builders negotiate price hard and accept the payment schedule as it comes. The schedule is the part that decides whether the job funds itself or the builder funds the job.
Within the limits of each state’s law, the number of claims, the size of each one and how closely they follow real progress on site are choices made at contract stage. Victoria is about to narrow those choices. Everywhere else, they are still largely in the builder’s hands.
Vecchio’s eight claims over twelve months is not a law of nature. It is a contract someone signed. Knowing where the legal limits sit is the first part of the commercial side of running a build.
Frequently asked questions
Under Schedule 1B of the QBCC Act 1991, the maximum deposit is 10 per cent on regulated contracts under $20,000 and 5 per cent at $20,000 or more. Where more than 50 per cent of the work is done off site, the cap is 20 per cent. The rules apply to domestic building contracts over $3,300.
Under section 40 of the Domestic Building Contracts Act 1995, as in force in October 2026, a major domestic building contract to build all stages of a home is capped at 10 per cent at base, 15 per cent at frame, 35 per cent at lock up and 25 per cent at fixing, with a 5 per cent deposit on contracts of $20,000 or more. New rules commence on 31 March 2027.
In Queensland and Tasmania, progress payments must directly relate to progress at the building site. In Western Australia and South Australia, only genuine progress payments for work already performed may be demanded. In New South Wales, contracts over $20,000 can only use stage payments after a stage is completed or payments backed by invoices for work done or costs incurred.
The Domestic Building Contracts Amendment Act 2025 commences by 31 March 2027 at the latest, unless proclaimed earlier, after the default date was moved from 1 December 2026. Draft regulations propose a 10 per cent deposit on a standard home build, but final regulations had not been made as at 26 October 2026.
In Queensland, the Building Industry Fairness (Security of Payment) Act 2017 does not apply to domestic building work where a resident owner is a party. In Victoria, domestic building contracts are excluded unless the owner is in the business of building homes and the contract is part of that business. In New South Wales, builders can serve payment claims on owner occupiers for contracts entered from 1 March 2021.
Related articles
- Vinnie Vecchio, TPB Head Coach, Says the Fix for Bad Cash Flow Sits in the Contract, Not the Bank Account
- Victoria’s Draft Rules Double the Builder Deposit to 10 Per Cent. The Bigger Change Is That the Payment Schedule Can No Longer Be Varied.
- The Hidden Cost of an Idle Site
- Construction Contracts in Australia
Listen to the full conversation with Vinnie Vecchio on The Good Builder Podcast, and follow us for updates as Victoria finalises its regulations.
Last updated: 26 October 2026. Legislation as in force at that date. Victorian proposals reflect draft regulations released for consultation in August 2026.
General Information Only: This article provides general information only and does not constitute legal advice. Domestic building contract rules differ between states and territories, apply above different contract values, and change over time. Victoria’s new regulations were in draft at the time of writing. Builders should obtain advice specific to their contracts and jurisdiction before setting deposits or payment schedules.
Author: TGB Editorial
0 Comments