Although not all contracting work needs a licence, you want to make sure you are doing the right thing. If you are serious about growing your business, a contractor licence will likely become a must. Here, we will run you through when your business will need to apply for a contractor licence. Although, this article will be especially useful for those working as builders or in trade. There are several reasons why your business would need to apply for a contractor licence. Most of the reasons relate to cost and the type of work your business is doing. However, there are also several situations where applying for a licence is not necessary. This article will run you through some of those as well. Keep in mind, however, that the requirements for a contractor licence vary from state to state. The majority of this article is based on NSW law.
When You Will Need a Licence
In NSW, your business needs a contractor licence if they want to contract, sub-contract or advertise for:
- Residential building or trade work where the reasonable market cost of the labour and materials is more than $5,000 (Including GST)
- Work that is considered a specialised trade
Examples of work considered as specialised include:
- Air Conditioning
- Electrical work
- Plumbing and draining
How to Apply for a Licence
Generally, there are two kinds of contractor licence you can apply for; individual and company. From there, you choose a class of licence which relates to the kind of work your business will carry out. If you are a sole trader, an individual licence is likely the one you need first. In NSW, you can apply for both kinds of contractor licence either in person at a service centre or online with Service NSW. If you do apply for an individual contractor licence online, however, you need to book an appointment.
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What You Need
Individual Contractor Licence
What you need for an individual contract licence is fairly straightforward. You will need to complete various forms and provide proof of both your identity and relevant qualifications for the class of licence. There may be other documents required if applicable.
Company Contractor Licence
To apply for a company contractor licence you generally need:
- Proof of Identity
- The relevant forms and checklists
- Your ABN
- And a Nominated Qualified Supervisor and their details
Nominated Qualified Supervisor
For a company to be approved for a contractor licence, they need a nominated qualified supervisor. The supervisor is responsible for ensuring compliance with the relevant laws, regulations and codes. They also ensure all work is being done properly and by people with the right qualifications or supervision. However, not everyone is eligible to be nominated as a supervisor. The supervisor needs to have an individual contractor licence and/or a qualified supervisor certificate. They can be directors of the company or even an employee if they are not temporary or casual.
Changes to Your Licence
If you are looking to update your licence class because you have new qualifications, you do not need to apply for a new licence. You can update your current licence to reflect your qualifications. However, you may still need to use an application form. If you only need to change the conditions of your licence, this can generally be done without a form. Instead, you can use a letter that explains the circumstances that warrant a change to the conditions.
Failure to Renew
The licence does not last forever. In NSW, you can apply for licences with a term of 1, 3 or 5 years. Once the period is over, you can renew your licence like you would your drivers licence. You have 3 months to restore your licence after you fail to renew it on time. After that point, you will have to apply for a new licence.
What Happens if You Don’t Have a Licence
If your business does any contract work that requires a licence, your business will likely incur a large fine. For example, businesses in NSW can face fines of up to $111,000 if they are a corporation and they do not comply with the Home Building Act 1989 (NSW) s 4. If the business is not a corporation, they can still face fines up to $22,000. Similar penalties apply in other states.
Conclusion
When your business needs to apply for a contractor licence varies from state to state. In NSW, a contractor licence will be required when the reasonable market cost for the labour and materials is above $5000. A contractor licence is also required for specialised trade. If your business conducts work without a licence when they are required to have one, large fines may apply. If you are unsure whether you need a contractor licence in your state, speaking to one our business lawyers may provide some clarity.
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