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Australia – QLeave Reforms.

7 July, 2014

 

Legal News & Analysis – Asia Pacific – Australia – Construction & Real Estate

 

What You Need To Know

 

  • Effective 1 July 2014, amendments to the Building and Construction Industry (Portable Long Service Leave) Act 1991 (the Act) and the Building and Construction Industry (Portable Long Service Leave) Regulation 2013 (the Regulations) will introduce significant reforms to the QLeave scheme. 
  • The long service leave levy rate will be reduced from 0.3% to 0.25% of the total cost of building and construction work. 
  • The monetary threshold for levy payment liability will be increased from AUD 80k to AUD 150k.
  • The cost of building and construction work will expressly exclude GST, and costs relating to the preparation of environmental impact statements and feasibility studies. 
  • The building and construction industry training levy, and the long service leave levy, will not be payable on building and construction work that is also resources operational work, with the amendments to the Regulations providing a detailed and broad definition of resources operational work. 
  • A tiered levy rate system will be introduced for large projects costing over AUD 1bn in value, with some limited transitional provisions applying.

 

QLeave Reforms

 
On 20 May 2014, the Queensland parliament passed the Construction and Tourism (Red Tape Reduction) and Other Legislation Amendment Bill 2014 (the Bill), introducing significant reforms to the QLeave scheme. As part of these reforms, the parliament has now published incoming amendments to the Regulations. Together, these amendments implement substantial amendments to the QLeave scheme, commencing 1 July 2014.

 
Amendments To The Act

 
Cost Of Building And Construction Work

 
The Bill amends section 73 of the Act and clarifies what will and will not be included in the cost of building and construction work when assessing levy contributions. The cost of building and construction work will:

 
a) exclude costs relating to the preparation of environmental impact statements and feasibility studies;

 
b) exclude GST; and

 
c) include costs of all materials manufactured, purchased, acquired or otherwise sourced interstate or overseas, and used for work in Queensland.

 
Amendments To The Regulations

 
Reduction Of Long Service Leave Levy Rate

 
The long service leave levy rate will be reduced from 0.3% to 0.25% of the total cost of building and construction work.

 
The Monetary Threshold For Payment Of Levy

 
The monetary threshold of the cost of building and construction work for which no levy is payable will be increased from AUD 80k to AUD 150k.

 

Resources Operational Work Exception

 
The building and construction industry training levy, and the long service leave levy, will not be payable on building and construction work that is also ‘resources operational work’.

 
‘Resources operational work’ is defined to mean the conduct of a ‘resources operation’, which is an operation which relates to:

 

a) mining under a mining tenement (defined broadly to capture mining and extraction activities relating to metals, minerals and hydrocarbons); or

 
b) separating, producing, gathering, storing, processing, refining or smelting a substance that is the product of mining (whether or not under a mining tenement); or

 
c) treatment operations undertaken in relation to a substance that is the product of mining (whether or not under a mining tenement).

 
The Regulation provides that ‘resources operational work’ also means “activities that are ancillary to, or undertaken in connection with, a resources operation” and includes the following examples:

 

  • prospecting and exploration activities;
  • erection of conveyor belts and other development activities substantially for use below the mine portal of an underground mine; 
  • purchasing, mobilising and constructing mobile plant or equipment, other than a dragline, for a resources operation; 
  • maintaining or repairing mobile plant, including a shutdown; 
  • maintaining and repairing fixed facilities, but not including a shutdown; 
  • ancillary or incidental generation, supply or transmission of electric power for resources operation; 
  • installing wells, gathering lines and associated infrastructure to extract hydrocarbons which are upstream of, and not including, a processing facility; 
  • maintaining or extending haul roads;
  • land clearing and rehabilitation;
  • bulk material loading and handling; and
  • some land access construction activities.

 
Tiered Levy Rate For Projects Costing Over AUD 1bn

 
The reforms will introduce a tiered levy rate for building and construction work costing over AUD 1bn. The tiered levy rate will operate as follows:

 

  • for work up to AUD 1bn in value, the following base levy rates will apply: 
    • 0.1% building and construction industry training levy; 
    • 0.25% long service leave levy; and
    • 0.125% work health and safety levy.
  • for the part of the work between AUD 1bn and AUD 5bn in value, the following reduced levy rates will apply: 
    • 0.05% building and construction industry training levy; 
    • 0.125% long service leave levy; and
    • 0.0625% work health and safety levy.
  • for any part of the work over AUD 5bn in value, no levy will be payable.

 
These monetary amounts will be adjusted each year on 1 July in accordance with the legislative formula provided in the amendments to the Regulations.

 
Transitional Arrangements For Tiered Levy Rates

 
Transitional provisions will apply to the incoming provisions regarding the tiered levy rates. The transitional provisions will apply if:

 
a) a person was served with a notice of assessment before the commencement of the amendments, for building and construction work costing more than AUD 5bn; and

 
b) immediately before the commencement of the amendments, the levy due had not been paid in full and more than AUD 1bn of the cost of the work has not been completed.

 
In these cases, the proportion of the work not more than AUD 5bn that remains uncompleted immediately before the commencement of the amendments, will be assessed under the new tiered system. This will allow the reduced levy rates for the cost of uncompleted work between AUD 1bn and AUD 5bn to apply. The transitional provisions will not, however, apply to the cost of work over AUD 5bn.

 
Commencement

 
Apart from the limited transitional provisions outlined above, the reforms will commence 1 July 2014 and only apply to QLeave assessments post-commencement.

 

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For further information, please contact:

 

Jeremy Chenoweth, Partner, Ashurst
jeremy.chenoweth@ashurst.com

Gisele Vanderweerden, Ashurst
gisele.vanderweerden@ashurst.com

 

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