QBCC announces changes to Qld Home Warranty Scheme

The Home Warranty Scheme is administered by the Queensland Building and Construction Commission (QBCC) and provides consumers with cover for loss where a building contractor fails to complete work or performs defective work and fails to rectify it.

Under the Scheme, licensed contractors carrying out residential construction work valued at more than $3,300, must pay an insurance premium on behalf of the consumer to the QBCC.

From 28 October 2016, the Queensland Home Warranty Scheme includes amendments designed to expand cover to consumers who were previously unable to access the Scheme.

The key amendments are:

• Expanded cover to include additional works
• Method and timing of payment of the insurance premium
• Option to increase the amount of cover by payment of a separate premium to the QBCC
• Calculation of the premium
• GST implications

 

Expansions to the Scheme

 

The Home Warranty Scheme will now cover the following additional works where valued at more than $3,300:

• Swimming pool construction or installation.
• Residences or related roofed buildings (eg. Sheds):
  1. All building work performed within the building envelope (internal or external parts of building
  2. Anything attached to the building if it requires building or plumbing approval
  3. Any structure attached to the external part of a building (eg. awnings, handrails etc)
  4. Stairs or access ramps which are permanently attached to the building
• Plumbing and drainage for a residence or related roofed building:
  1. Building work for the primary water supply (eg. Water tank)
  2. Building work for sewerage or drainage (eg. Connection to the sewerage main)
  3. Stormwater drainage (eg. Repair of downpipes and gutters)
• Construction of manufactured homes.

 

Payment of the insurance premium

 

Previously, QBCC premiums had to be paid as soon as practicable after the contract with the consumer was signed.

Under the amended Scheme, premiums must be paid to the QBCC within 10 days of entering into a contract or before the work starts (whichever is earlier).

 

Optional additional cover

 

Prior to this amendment, the standard insurance cover was a maximum of $200,000.  Consumers now have the option to increase their cover to $300,000 by paying an additional premium to the QBCC.

For consumers to be eligible for the optional additional cover, the standard premium must first be paid by the licensed contractor, and then the consumer must pay the additional premium within 30 days of entering the contract or prior to work starting (whichever is earlier)

 

Calculation of the premium

 

Premiums are now based on the total insurable value of the works which includes the value of materials whether supplied by the contractor or by the owner.

 

GST implications for contractors

 

Prior to 28 October 2016, contractors paid the Scheme premium and were therefore able to claim back the GST component in their GST returns.

From 28 October, the scheme requires the contractor to collect and pay the premium on behalf of the consumer thus resulting in two main GST implications.  Firstly, the QBCC will issue a tax invoice to the consumer directly and will no longer issue an invoice to contractors.  Secondly, as the contractor is merely making payment on behalf of the consumer, the contractor will not be entitled to claim back GST credits as the premium is not an expense of their business.

 

Further help:

Further information on the Queensland Home Warranty Scheme requirements can be found on the QBCC website or by contacting your Marsh & Partners QBCC experts on 07 3023 4800 or at mail@marshpartners.com.au.

Share this article on LinkedIn: