Business Law: Legal Requirements for Establishing a Building Business

This report provides a detailed overview of the legal requirements for builders in Australia, addressing the needs of someone establishing a building business. It covers the role of a builder, including contracting, tendering, and project management. It emphasizes the importance of registration with the Victorian Building Authority (VBA), outlining the different types of licenses (Commercial and Domestic, Limited and Unlimited) and the restrictions associated with each. The report also discusses permits, the white card requirement, ABN, insurance, payment procedures, and taxation. Furthermore, it explores the importance of industry memberships like the Australian Institute of Building and the Housing Industry Association. The report covers legal requirements, including primary and secondary legislation relevant to the construction industry. Finally, it concludes with recommendations for operating a successful and legally compliant building business.

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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Executive Summary
A builder’s role is more than just constructing buildings. It may include few other
types of work as well, like contracting for building works, Giving quotation for tenders,
arranging payments for subcontractors and labours, making schedule for construction work,
conducting on-site inspections and meetings, subcontracting to other builder in case of
necessity. A professional builder is expected to interpret architectural drawings and lay down
his own visions and thoughts to it. The professional builder must coordinate with his human
resource, that is, the workers who are one of the main components that carry forward a
construction work. To work as a builder it is important to have a licence or be registered
under the Victorian Building Authority. Without a proper licence any builder would not be
permitted to carry out construction work. The licence is a proof of his ability and competence
as a builder. The professional builder must adhere to the legal requirements, legislations and
standard along with ensuring the safety quality and cost of the construction work. It is of
utmost importance that the builder must submit the architectural plans to the local authorities
before even starting the initial construction work. This paper covers everything that a person
would require, from getting himself/herself registered into a qualified builder course to
getting registered as a builder and eventually following the laws and regulations to continue a
career as a successful and responsible builder.

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Table of Contents
Introduction....................................................................................................................4
Qualified Builder’s Course............................................................................................4
The functions of a professional builder......................................................................5
Registration under VBA.................................................................................................5
Licences and Permits......................................................................................................7
Types of Builders’ Licences.......................................................................................7
Restrictions.................................................................................................................8
Permits........................................................................................................................8
White card..................................................................................................................9
Australian business number (ABN).........................................................................10
Contractors...................................................................................................................10
Insurance......................................................................................................................10
Payments......................................................................................................................12
Security of Payment.................................................................................................12
Taxation........................................................................................................................13
Finance.........................................................................................................................13
Memberships................................................................................................................13
Membership of the Australian Institute of Building (AIB)......................................13
Membership of the Australian institute of quantity surveyors (AIQS)....................14
Membership of the Australian Institute of Business surveyors (AIBS)...................15

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Membership of the Housing Industry Association (HIA)........................................15
Master builder..........................................................................................................16
Approach to the Environment......................................................................................16
Legal requirements.......................................................................................................17
Primary legislation important for construction industry..........................................18
Secondary legislation important for construction industry......................................19
Conclusion and Recommendation................................................................................21
References....................................................................................................................23

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Introduction
A builder’s role is more than just constructing buildings. It may include few other
types of work as well, like contracting for building works, Giving quotation for tenders,
arranging payments for subcontractors and labours, making schedule for construction work,
conducting on-site inspections and meetings, subcontracting to other builder in case of
necessity. All one needs is a contractor’s license which can be limited to, for example, doors
and windows installation or setting up special type of roof for a house. One also requires a
registration as to a supervisor for building work or he may also hire all registered and
approved supervisor (Business.gov.au 2019). Thus, Bob’s brother would be required to
follow the below-mentioned rules and regulations to establish himself as a professional
builder. To work as a builder it is important to have a licence or be registered under the
Victorian Building Authority. Without a proper licence any builder would not be permitted to
carry out construction work. The licence is a proof of his ability and competence as a builder.
Qualified Builder’s Course
The Victoria state government lays down several builders’ courses whose training
time may vary from 9 months to a longer period of 5 years. The average fees for a builder’s
course are around $77,622 (Victorian Skills Gateway 2019). The state government expressly
mentions that the chances of employment after pursuing the builder’s course under it seem to
be strong and prospective (Victorian Skills Gateway 2019). For pursuing a professional
builder’s course in Victoria's one would require:
 Diploma in building and construction
 Experience in the construction industry
 Registration under Victorian Building Authority

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 A White Card for having an access to any construction site in the country (Victorian
Skills Gateway 2019).
The functions of a professional builder
A professional builder is expected to interpret architectural drawings and lay down his
own visions and thoughts to it. The professional builder must coordinate with his human
resource, that is, the workers who are one of the main components that carry forward a
construction work. The builder must focus into procurement of raw materials for the
construction work and similarly must be well acquainted with the delivery of materials and
equipments required for the construction from time to time (Victorian Skills Gateway 2019).
It is of utmost importance for a professional builder to be conscious about the deadline of the
construction work that he has committed to the owner. Sticking to the budget pre-decided is
also important so that there comes no such situation where the builder needs to negotiate for
extra payment from the owner (Victorian Skills Gateway 2019). The professional builder
must adhere to the legal requirements, legislations and standard along with ensuring the
safety quality and cost of the construction work. It is of utmost importance that the builder
must submit the architectural plans to the local authorities before even starting the initial
construction work. A professional builder must oversee and inspect the ongoing building
work and take progress report from the subcontractors, if involved (Victorian Skills Gateway
2019).
Registration under VBA
The Victorian building authority (VBA) regulates the plumbing and building
practitioners for ensuring the efficiency and competitiveness in the construction industry in
Victoria. VBS services comprises of responding to enquiries from the common people
pertaining to plumbing and building industry. It has the responsibility to register, provide
licence and discipline to the numbers in Victoria. It also provides registration and licence to

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the builders in Victoria. It also issues the owner-builder certificate of consent. It gives expert
technical advice as well as solutions the builders of the construction industry. The major and
critical responsibility of this authority is to monitor the collection of building permit levies. It
publishers data for the plumbing and building practitioners. It gives protection of the
consumers who are dealt by the builders in the process of a construction assignment. It also
oversees the activities of building surveyors and the building permit system of Victoria.
The aim of VBA is to establish a respected construction industry which will be
guarded by a trusted regulator along with a conscious community of builders and plumbers in
Victoria. Its objective is to protect the construction industry as well as the community by
empowering the practitioners as well as the consumers. Its tribes to respond to the concerns
and the difficulties of the industry, thus improving the culture and capability of the industry.
The Building Act 1993 controls the building activity in Victoria. It decides the
legislative framework for making regulations pertaining to construction, building standards
and maintenance of building safety features. The Objective of the Act is to protect the people
and ensure their safety and health, who use buildings and other public places
Bob’s brother must be registered with the Victorian Building Authority in order to
be a registered builder, domestic or commercial. Registration is mandatory for performing
domestic building work, pricing above $10000 that includes labour charges and the cost of
materials. For carrying out works like demolition, re-blocking or re-stumping registration is
mandatory irrespective of the cost. Registration is also important for carrying out different
types of building work like painting or plastering that amounts to more than $10,000 which
includes labour charges and material costs.
Domestic builder may be categorised into a Domestic builder of unlimited scope or
class of work and Domestic builder who is limited to specified class of work. A domestic
builder with unlimited class of work can carry out manage or arrange several kinds of

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domestic building works like construction renovation maintenance of a home, specified under
class 1,2, 4 and 10 specified under the Building Code of Australia. On the other hand
domestic builder who is limited to a class of work is vast and more in number than that of
unlimited work. Domestic Building Work is related to the construction, improvement,
maintenance or renovation of a home that is a residential premise or even a commercial
premise that is used for residential purpose as well. Bob’s brother needs to keep it in mind
that if he is signing a contract to work on a domestic building project exceeding $10,000, then
he must enter into a major domestic building contract with the client. He must also remember
to get himself registered under the Building Act 1993 for entering into a major domestic
building contract. If Bob’s brother gets himself registered under the Unlimited Class, he
would be liable to carry out all kinds of domestic building work that includes construction,
improvement, maintenance and renovation of the a home (class 1,2 and 4 buildings and
associated class 10 buildings as laid down in the Building Code of Australia). However, if he
gets himself registered under the Limited Class, then he shall be liable to carry out the
specified activities mentioned in the certificate of registration.
To apply, Bob’s brother needs to clear the national Police check and get hold of the
domestic builder registration application form.
Licences and Permits
Types of Builders’ Licences
In Victoria Builders' licence are regulated and managed by the Victorian Building
Authority (VBA). Builders’ licence is called Builders’ Registration in Victoria (Hia.com.au
2019). It is important to register for licence as without a licence under the Victorian
Building Authority, Bob’s brother or any other builder, of limited or unlimited class, will not
be permitted to carry out construction work and it would be illegal if one does.

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There are different types of builders’ registration or licence in Victoria among
which the most common types are:
 Commercial Builder, Limited and Unlimited
 Domestic Builder, Limited and Unlimited
 Domestic Builder, Manager
It is important for the builders to understand and get themselves registered into the
particular registration type they want to pursue as there would be permitted add to be able to
work only on the projects they are registered for. The builders are restricted from working on
any other kind of projects on which they are not qualified all registered to work (Hia.com.au
2019).
Restrictions
There are several restrictions that Bob’s brother needs to comply with as a registered
builder. There are restrictions as not to indulge in construction work without a proper licence
with the Victorian Building Authority (VBA) initially. Once he has obtained the licence of
construction, he must comply with the restrictions laid down under the Building Regulations
2018, such as restriction to keep the noise low while construction, restriction to protect the
flora and fauna around the construction site, restriction not to damage any public property
while carrying out construction work, liability to maintain the safety of the workers, et cetera.
It is important to maintain these restrictions, as otherwise it might cost builders a huge
penalty or even cancellation of his licence.
Permits
Construction industry involves the following Licences and permits under the state
government which relates to:
 Building licence

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 white card
 electrical licence
 plumbing licence
 licence to construct a bore or well
 Gas fitting licence
 heavy vehicle licence
 zoning approvals
 Permit to carry out high risk work
 Permit to take down trees if needed however protecting tree and wildlife is a priority
 Permit to use explosives to blast things required for construction
 Permit to work on properties that have been branded as a heritage
 Permit to dispose of construction wastes
 Permit to use dangerous chemicals or substances that are essential for construction
work.
White card
A white card refers to the training of construction induction. People who carry out
construction work need a proof of their completion of a general occupational health and
safety (OHS) training for working in the construction industry. An employer recruiting
constructors or workers for construction work in Victoria mast ask for a Victorian
construction induction card (white card) before allowing the worker to start working on the
project (Worksafe.vic.gov.au 2019).
For applying for a white card, Bob’s brother needs to attend any kind of construction
induction training course under a registered training organisation and then use the statement
of attainment given to him as an evidence for starting to work on construction projects. The
person then needs to wait for the formal white card to arrive in his mail.

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Australian business number (ABN)
Bob’s brother would require an Australian business number like any other person
carrying out any kind of business in the country. An Australian business number contains a
11 digit unique number that helps to identify a particular business in front of the Government
and the community as a whole (Business.gov.au 2019). A person carrying on an enterprise
must have an ABN while ineligible person would be refused by the authority
(Ablis.business.gov.au 2019). An ABN would help:
 To establish one's business identity in front of others for making purchases, placing
orders and for giving out invoices.
 To avoid paying the pay as you go (PAYG) tax on the payments that one receives.
 For claiming goods and services tax credits (GST)
 For obtaining an Australian domain name.
 For claiming energy grants credits (Business.gov.au 2019).
Contractors
The construction industry often makes use of contractors for performing special skills.
Contractors like plasterers bricklayers electricians draftspersons plumber concreters are often
required for the building and construction industry. For the purpose of setting provisions for
paying taxes, workers compensation along with superannuation, it is necessary for the builder
to be clear of the purpose and the role of the skilled person, whether hired as an employee or
a contractor (Business.gov.au 2019).
Insurance
Bob’s brother may have insurance when he is working on domestic building work
which requires Council approval. The Building Indemnity Insurance cost around $12,000
or more which includes the process of building a house renovating it and building an

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extension of the house. The builder must serve a copy of his certificate of insurance when he
is constructing a domestic building, to the owner of the building as well as to the Council
(Business.gov.au 2019).
The Home Warranty Insurance for construction projects expertise in delivering the
best quality warranty services to the residential building construction industry
(Hiainsurance.com.au 2019). The home warranty protects the home owner by insuring him
against the non completion of the building contract and also against the failure of the builder
to rectify the false that he has made in the process of construction. It makes sure that the
builder rectifies its false for it is responsibility of the builder to rectify the false within in the
agreed warranty period. In Victoria, any building work exceeding the amount of $60,000
which covers up to $300,000 (Hiainsurance.com.au 2019). Home warranty period is off of
6 years immediately counted after the overall completion of the construction work.
Contract Works Insurance or the Construction and Public Liability Insurance
policies make sure that the activities related to a construction project are brought together to
cover the interests of the parties involved in the project. This insurance covers not the owner
of the project and the builder, but also the sub-contractors, the equipment and material
supplier. It covers accidental risks which may cause physical hurt or severe damage to the
workers present at the construction site, along with third party liability. This policy covers
every kind of risk that a construction project may face, however, subject to terms and
conditions.
Professional Indemnity Insurance indemnifies a builder, building surveyor, quantity
surveyor, building inspector, draftsperson and engineers as well as erectors, building
demolishers and supervisor of temporary structures. This insurance indemnifies the building
practitioners against civil liabilities pertaining to the claims made during the insurance period
arising out of breach of duty of care of such building practitioner.