Security of Payment Act Australia: Claims and Schedules

A Security of Payment Act turns a builder’s invoice into a statutory demand with a clock attached. If the party receiving the claim does not reply in the right form within the right number of business days, it can become liable for the whole amount claimed, whether or not the work was done and whether or not it has a defect claim, a liquidated damages claim or a set-off worth more than the claim itself. That single mechanic is why a developer who treats a payment claim as a piece of paperwork for the contract administrator to deal with next week can end up funding an overpayment out of equity.

The obligations sit on you as principal, not on your builder, your contract administrator or your quantity surveyor. If a payment schedule is served late or drafted badly, the money leaves your account and the consequences are yours: an adjudicated amount you may have to pay before you can argue about it, a judgment debt registered against your project company, and in New South Wales a requirement to pay the unpaid portion into court as security before a challenge is finally determined. Those mechanics are what this guide sets out, and the questions worth putting to your construction lawyer are at the end.

The figures, timeframes and section references below were current at the date of writing and change regularly. Victoria’s regime was substantially rewritten with effect from 15 April 2026, and Queensland’s trust account rollout was paused in 2025. Each point links to the legislation or the regulator that publishes it, and that link is where to confirm the position before you rely on it.

What does a Security of Payment Act actually do?

It gives anyone who carries out construction work a statutory right to progress payments, and a fast, cheap adjudication process to enforce that right, regardless of what the contract says. The stated object of the Building and Construction Industry Security of Payment Act 1999 (NSW) is to ensure a person who undertakes to carry out construction work is entitled to receive, and is able to recover, progress payments.

The design principle across all of the Australian schemes is generally described as “pay now, argue later”. The New South Wales Government summarises the purpose as helping claimants maintain cash flow through a project and obtain payment on an interim basis, while preserving the parties’ final rights. An adjudicator’s decision does not settle who is right under the contract. It settles who holds the money while that argument runs.

For a developer, three consequences follow from that design.

The first is that the money moves on statutory timing, not contractual timing. Your construction facility drawdown cycle, your quantity surveyor’s inspection date and your financier’s turnaround do not pause the clock. If your construction loan drawdowns run on a monthly cycle that lands after the statutory due date, the gap is funded by you.

The second is that the right cannot be contracted away. The New South Wales Act contains an express no contracting out provision, and every Australian jurisdiction has an equivalent. A clause in your building contract saying the builder will not use the Act is generally of no effect.

The third is that the obligation to respond is yours personally, in the corporate sense. The Act imposes it on the respondent, which is the entity named in the contract as the party liable to pay. That is usually the project special purpose vehicle, and its directors will feel the outcome.

Who is the developer in this, the claimant or the respondent?

Usually the respondent, and sometimes both. Understanding which hat you are wearing decides which deadlines bind you.

On a conventional structure, the developer is the principal under a head building contract. The builder serves payment claims on you, and you are the respondent who must serve a payment schedule. That is the exposure that matters most.

If you engage trades directly under a construction management or a managing contractor arrangement, each trade contract makes you the respondent to that trade’s payment claims as well. A developer running eight or ten direct trade packages has eight or ten separate statutory clocks running, which is one of the exposures that separates the construction delivery models from each other, often on different dates, and no single builder absorbing them. Choosing between direct trade engagement and a single head contract under a design and construct contract is partly a choice about how much Security of Payment administration you take on.

You can also be a claimant. If you carry out construction work for someone else, for example under a works agreement with a council or an adjoining owner, you may be entitled to serve payment claims yourself.

There is a fourth position, and it catches developers who think they are not involved. In New South Wales, a subcontractor who has applied for adjudication against your builder can serve a payment withholding request on you as principal contractor. The New South Wales Government describes the effect as directing the principal contractor to retain sufficient money to cover the claim out of money that is or becomes payable to the respondent. If you do not owe the builder anything, you must tell the claimant within 10 business days of receiving the request. There are penalties for non-compliance. So a dispute two levels down the contract chain can freeze money you were about to release to your head contractor.

What makes a payment claim valid?

Less than most developers assume. In most jurisdictions a payment claim is simply a written document that identifies the construction work, states the amount claimed, and states that it is made under the relevant Act. It does not have to be called a payment claim, it does not have to be on a particular form, and in New South Wales it may be an ordinary invoice that meets the statutory requirements.

The practical trap is that a document you filed as a routine progress claim may have been a statutory payment claim. If it was, the clock started when it was served, not when your contract administrator got to it.

A few points tend to decide validity in practice.

Timing of service. In New South Wales, only work completed in the past 12 months can be claimed, according to the New South Wales Government. In Victoria, following the April 2026 amendments, the Building and Plumbing Commission states that the latest time a payment claim can be served is the later of the time specified in the contract, or 6 months after practical completion of all construction work or 6 months after the supply of all related goods and services. That was extended from 3 months.

Frequency. New South Wales and Victoria have both moved away from contractual reference dates towards a monthly statutory entitlement. Victoria’s Building and Plumbing Commission explains that reference dates have been replaced with a monthly entitlement, so a claim can be served on and from the last day of the month in which work was first carried out, and then on and from the last day of each subsequent month, with a limited December exception allowing service from 22 December for work done between 1 and 21 December.

Supporting statements. In New South Wales, a head contractor serving a payment claim on a principal must generally accompany it with an approved supporting statement declaring that subcontractors have been paid. The New South Wales Government publishes the approved supporting statement forms and notes that a false or misleading supporting statement, or a missing one, can be reported to Building Commission NSW. As principal, the supporting statement is your best early indicator that money is not reaching the subcontractors on your site.

Who received it. Service is generally effective when the claim reaches the respondent, which may include an email address nominated in the contract. A payment claim sitting unread in a project inbox while your contract administrator is on leave is still served.

What is a payment schedule, and what happens if you miss the deadline?

A payment schedule is the respondent’s written reply stating the amount it proposes to pay and, if that is less than the amount claimed, why. Missing the deadline is the single most expensive mistake available to a developer under these Acts.

The New South Wales Government sets out the consequence plainly: if you do not submit a payment schedule within the allocated time, you are liable for the full amount claimed, and if the claimant applies for adjudication or starts court action to recover that amount, you cannot raise a defence based on the construction contract or a cross-claim.

Read that second limb again, because it is the one that surprises people. It is not only that you owe the claimed amount. It is that the defects claim, the delay claim, the liquidated damages entitlement and the set-off you were counting on cannot be run at all in those proceedings.

There is a second, quieter version of the same trap for developers who do serve a schedule. Your reasons are locked in at the moment you serve it. The New South Wales position is that a respondent cannot include in an adjudication response any reasons for withholding payment unless those reasons were already included in the payment schedule given to the claimant. A payment schedule that says “amount assessed by the superintendent” and nothing more may leave you with almost nothing to argue at adjudication, even though you served it on time.

A worked example of what the time bar costs

Assume a Sydney apartment project. The builder serves a payment claim for $2,400,000 covering the month. Your quantity surveyor assesses the value of work properly carried out at $1,850,000, and you also consider you hold a liquidated damages entitlement of $180,000 for delay to date.

If a compliant payment schedule is served within 10 business days setting out the $1,850,000 assessment and the reasons, and separately setting out the liquidated damages set-off and its basis, the argument is live. The builder may adjudicate, and the adjudicator may land anywhere between the two figures, but you are in the contest.

If no payment schedule is served in time, the amount you may become liable to pay is $2,400,000. The difference between that and your assessed $1,850,000 is $550,000 of cash out the door on an interim basis. The $180,000 liquidated damages claim is not available as a cross-claim in those proceedings. You would be left recovering the overpayment separately under the contract, from a builder who has already banked it, while your project funds $550,000 it did not budget for. On a scheme where the total development cost leaves a $2,000,000 profit, a single missed deadline could account for more than a quarter of it before you argue about who was right.

The trap is not the assessment. It is the diary.

How long do you have, state by state?

The timeframes differ in every jurisdiction, and the number that binds you is the earlier of the statutory period and any shorter period in your contract. Where a contract specifies a shorter deadline, the contract generally wins.

Sources for the table entries are the New South Wales Government guidance on responding to a payment claim and making a payment claim, Victoria’s Building and Plumbing Commission Security of Payment overview and changes affecting construction contracts, the Queensland Building and Construction Commission payment protection laws and Business Queensland payments guidance, the Western Australian Government’s overview of the 2021 Act, the South Australian Small Business Commission’s guidance on making a claim, Consumer, Building and Occupational Services Tasmania on responding to a claim, and ACT Planning on security of payments.

Why the Northern Territory is genuinely different

The Northern Territory did not adopt the East Coast payment claim and payment schedule model. The Construction Contracts (Security of Payments) Act 2004 (NT) works by implying provisions into a construction contract where the contract is silent, and by allowing either party to refer a “payment dispute” to adjudication once one arises. There is no automatic liability for the full claimed amount for failing to reply in a set form, because there is no equivalent statutory reply.

The Northern Territory Government’s guidance describes a period of 65 working days from the date the payment dispute arose in which to apply for adjudication, and notes this replaced an earlier 90 day period. Some commentary continues to describe the period differently, so if you are building in the Northern Territory this is one to confirm directly against the current Act and with your lawyer before you rely on a date.

What changed in Victoria on 15 April 2026?

Victoria’s regime was overhauled, and the changes apply to existing contracts, not only new ones. If you are building in Victoria under a contract signed in 2024 or 2025, your obligations changed underneath you.

The Building and Plumbing Commission sets out the changes to the Security of Payment scheme as including the following, all with effect from 15 April 2026 under the Building Legislation Amendment (Fairer Payments on Jobsites and Other Matters) Act 2025 (Vic).

Excluded amounts are gone. Victoria was the only jurisdiction that carved out whole categories of claim from adjudication through the dual concepts of “claimable variations” and “excluded amounts”. Those have been removed. The scope of what a builder can now put in front of a Victorian adjudicator has broadened materially, and generally now includes time-related costs such as delay costs, and costs arising from latent conditions and changes in regulatory requirements. For a developer, claims that previously could not reach adjudication in Victoria now can, on a fast statutory timetable, with your reasons locked in at the payment schedule.

Payment terms are capped at 20 business days. The Commission states that the amended Act renders any contract provision of no effect to the extent that it provides for payment later than 20 business days after a payment claim is served, and that parties cannot agree a longer period. Where the contract does not specify a due date, the default is 10 business days after the earliest day on which the claim could be served. Long-dated payment terms negotiated into a Victorian building contract are simply unenforceable to that extent.

Reference dates replaced by a monthly entitlement, with the December carve-out described earlier.

The claim window doubled, from 3 months to 6 months after practical completion or the supply of all goods and services.

Performance security is now in scope. This is the change most likely to catch a developer off guard. The amended Act creates a statutory entitlement to claim for the release of a performance security, where performance security includes a guarantee, bond or retention money. A claim can be served on the earlier of 20 business days after the end of the defects liability period, or on or after an event specified in the contract. Separately, the Commission states that a person seeking to have recourse to a performance security must first serve a notice on the person who provided it and then wait at least 5 business days before calling on it, or any longer period the contract specifies. That requirement forms part of every construction contract and cannot be varied by agreement.

In practice, that means a Victorian developer holding a bank guarantee can no longer call on it on the morning it decides to. It must give notice and wait, which gives the builder a window to seek an injunction. Where security recourse has been treated as an immediate remedy in a Victorian development cashflow, that assumption may now be worth revisiting.

Adjudicators have more time. Determinations are due within 10 business days of appointment or of the last day for the adjudication response, whichever is later, extendable by up to a further 20 business days by agreement.

How does adjudication actually run?

Fast, on paper, and almost entirely on documents. Using New South Wales as the worked example, the New South Wales Government describes the sequence for applying for adjudication and responding to an adjudication application roughly as follows.

Where a payment schedule was served and the claimant disputes the scheduled amount, the claimant applies for adjudication within 10 business days of the payment schedule.

Where no payment schedule was served, the claimant must give written notice of its intention to apply for adjudication within 20 business days following the due date for payment, and the respondent is given 5 business days after receiving that notice to provide a payment schedule. That second window is a genuine lifeline for a developer who has missed the first deadline, and it is the reason a missed payment schedule should go to your lawyer the same day rather than the following week.

The respondent may lodge an adjudication response within 5 business days of receiving the application, or 2 business days of receiving the adjudicator’s acceptance, whichever comes later. The adjudicator has 10 business days to determine the application after notifying the parties of acceptance.

Add it up and a developer can move from receiving a payment claim to holding an enforceable determination in roughly six weeks, without a hearing, without discovery, and without the ability to run any argument that was not in the payment schedule. Your normal dispute reflexes, which assume months of correspondence, do not fit this timetable.

If the determination goes against you, the adjudicated amount is generally recoverable as a debt and can be entered as a judgment. In New South Wales, a respondent commencing proceedings to have that judgment set aside is required to pay the unpaid portion of the adjudicated amount into court as security pending final determination. So challenging a determination generally means finding the cash anyway.

The Supreme Court’s supervisory role is narrow. The New South Wales Act allows a court to set aside the whole or part of a determination where it finds a jurisdictional error. That is not an appeal on the merits. An adjudicator who reaches a decision you think is commercially wrong, but does so within jurisdiction, has generally reached a decision that stands on an interim basis.

What are the traps that catch developers specifically?

Business days are not the days on your calendar

Queensland is the clearest example. The Queensland Building and Construction Commission defines a business day so as to exclude Saturdays, Sundays, public holidays, and any day between 22 and 24 December, 27 and 31 December, or 2 and 10 January. The Commission also notes that a claim given during that shutdown window is taken to be received on the first business day afterwards. Other jurisdictions define business days differently. A deadline calculated on a generic calendar tool, or on the wrong state’s definition, is a deadline calculated wrong.

The related trap is obvious once stated. Builders know this too, and a payment claim arriving in the week before Christmas is not always an accident.

The superintendent’s certificate is not a payment schedule

Under most standard-form contracts the superintendent or contract administrator issues a progress certificate. That document performs a contractual function, and it is a different instrument again from the lender’s certificate covered in the guide to quantity surveyor reports. It is not automatically a payment schedule, and even where it could serve as one, it often lacks the statutory content: an express statement of the scheduled amount, and the reasons for withholding, expressed as reasons rather than as an assessment.

Where you have engaged a superintendent, the questions worth settling in writing before the first claim are who serves the payment schedule, in whose name, by when, and who confirms service. A guaranteed maximum price contract or a design and construct arrangement does not change any of this. The statutory obligation stays with the respondent named in the contract.

Your reasons have to be specific enough to argue

A payment schedule that states an amount and gives a one-line reason will generally satisfy the Act’s minimum, but it may leave you with very little at adjudication, because you cannot add reasons later. The working discipline most developers land on is that the payment schedule is drafted as if it were the adjudication response, because in substance it sets the boundaries of one.

Retention money may not be yours to hold loosely

Several jurisdictions now require cash retentions to be held in trust rather than used as working capital.

In New South Wales, the Government states that retention money held by head contractors for projects valued over $20 million must be held in a trust account with an authorised deposit-taking institution (ADI), under the Building and Construction Industry Security of Payment Regulation 2020 (NSW). Where a project reaches the $20 million threshold after the head contractor first contracts with the principal, the requirement applies to contracts the head contractor enters into after that threshold is reached.

In Western Australia, the Department of Energy, Mines, Industry Regulation and Safety operates a Retention Trust Scheme introduced from 1 February 2023 and phased in, extending to eligible contracts over $20,000 including GST from 1 February 2024.

In Queensland, retention trust accounts are tied to the project trust framework. The Queensland Building and Construction Commission’s trust account rollout page states that current eligible contracts include Queensland Government contracts of $1 million or more, and private sector, local government, statutory authority and government-owned corporation contracts of $10 million or more, and that the further rollout to private projects below $10 million was paused. Phases previously planned for 1 March and 1 October 2025, which would have brought the threshold to $3 million and then $1 million, will not proceed on that timetable.

These obligations mostly bite the head contractor rather than the developer. They matter to you anyway, because a builder who is not complying with a trust obligation is a builder with a cash problem, and that is your problem when the project is half built. It is a question worth putting to a builder during selection and due diligence, not after.

Adjudication downstream is a solvency signal

A subcontractor adjudicating against your head contractor is telling you something about your builder’s cash position that the monthly report will not. The same is true of a payment withholding request landing on your desk. Both are worth treating as early warnings on the credit side of the project, alongside the usual programme and progress indicators.

Suspension rights sit on the other side

Most of the Australian Acts give a claimant a right to suspend work in defined circumstances where payment is not made. The New South Wales Act contains an express provision allowing the claimant to suspend work. A lawful suspension on a project with a fixed settlement programme and an interest bill accruing daily is expensive in ways that do not appear in the payment dispute itself.

How should this sit in your feasibility and your funding?

As a timing risk and a contingency question, not as a line item.

Statutory payment terms compress the gap between certifying work and paying for it. In New South Wales that gap can be as short as 15 business days from a head contractor’s claim. If your financier’s drawdown process, including quantity surveyor inspection, report and funding, takes longer than that, the difference is equity funded in the ordinary course, every month. That is a working capital requirement, not a contingency event, and it is worth modelling explicitly rather than assuming the builder will wait.

The genuine contingency question is different. An adverse adjudication is a cash timing event that can arrive at roughly six weeks’ notice, is not appealable on the merits, and may need to be funded before it can be challenged. Whether your construction contingency and your undrawn facility together can absorb one is a question worth answering before it happens rather than during it.

Does New Zealand work the same way?

Similar in shape, with different names and different periods. New Zealand’s regime is the Construction Contracts Act 2002, which uses payment claims and payment schedules in a comparable way, and measures time in working days rather than business days.

The Act’s default position is that a payment becomes due and payable on the date occurring 20 working days after a payment claim is served, where the contract does not provide otherwise. As in Australia, failing to respond with a compliant payment schedule within the required period can leave the payer liable for the claimed amount, and adjudication is available. The Ministry of Business, Innovation and Employment publishes an overview of the Act.

New Zealand’s retention regime was tightened by the Construction Contracts (Retention Money) Amendment Act 2023 (NZ). Building Performance sets out the current retention money requirements, under which retention money is trust property held on trust, created by operation of the section when the amount becomes retention money, and must generally be kept in a compliant bank account unless a complying instrument is in force. Those requirements came into force on 5 October 2023 and apply to new commercial contracts from that date, and to existing commercial contracts renewed on or after it.

A developer operating on both sides of the Tasman should not assume the Australian timetable. Twenty working days in New Zealand and 10 business days in Victoria are not interchangeable, and the definitions of the day itself differ.

What to ask your construction lawyer

These are the questions that decide the position on your project. They are not questions this guide can answer, because the answers turn on your contract, your structure and your jurisdiction.

• Which entity in our structure is the respondent under each contract, and does that entity have the cash to meet an adjudicated amount without a capital call?
• Does our building contract set a payment schedule period shorter than the statutory one, and if so, what is the actual deadline we are working to?
• Is our superintendent’s progress certificate capable of operating as a payment schedule under the relevant Act, and if not, what document are we serving and who signs it?
• What level of detail do our payment schedule reasons need to carry to preserve our defects, delay and liquidated damages positions at adjudication?
• If we miss a payment schedule deadline, what is the recovery path in our jurisdiction, and how many days do we realistically have to use it?
• For a Victorian project, how do the April 2026 amendments change what our builder can now claim, and does our contract contain payment terms that are now of no effect?
• For a Victorian project, what notice must we give before calling on a bank guarantee or retention, and what is our exposure if the builder seeks an injunction in that window?
• What happens to our position if a subcontractor serves a payment withholding request on us, and what are our obligations and deadlines in responding?
• If an adjudication goes against us, what security would we have to provide to challenge it, and over what timeframe?
• Does our contract’s dispute resolution clause interact with, or get overridden by, the statutory adjudication process?

What to ask your contract administrator or superintendent

• Who is monitoring service of payment claims, including by email, and what happens during leave and the Christmas shutdown?
• What is our standing turnaround for producing an assessment, so the payment schedule is drafted with days to spare rather than hours?
• Are we using the correct business day definition for this jurisdiction when calculating every deadline?
• What is our process for confirming and evidencing service of a payment schedule, and where is that record kept?
• Are we tracking whether the head contractor is providing supporting statements, and what do we do if one is missing or looks wrong?

What to ask your financier or funding adviser

• How long does a full drawdown cycle take from claim to funds, and how does that compare with the statutory payment deadline in our jurisdiction?
• What is the facility’s position if we need to fund an adjudicated amount that exceeds the certified value of work?
• Does the facility documentation require notification if an adjudication application is made against us or against our builder?

The short version

A Security of Payment Act does not decide who is right. It decides who holds the money while that is worked out, and it decides it on deadlines measured in business days. For a developer, the whole regime reduces to a small number of operational habits: know which entity is the respondent, know the deadline in your jurisdiction and in your contract, treat every incoming document as a possible payment claim, and draft the payment schedule as though it were the adjudication response, because it largely is.

Everything else, the merits, the defects, the delay, survives to be argued later. The deadline does not.