What are the deposit rules for tradies under Australian consumer law?

Every Australian state caps how much deposit a builder or trade contractor can legally collect on a domestic building contract. Caps range from 5% to 10% of the contract price depending on the state and the contract value, and home warranty insurance must be in place before you accept any money at all. Taking more than the legal cap is an offence and can make the contract unenforceable.

Updated 16/10/2026

What deposit cap applies in each state?

Each state's domestic building legislation sets the maximum deposit a licensed builder or trade contractor can request from a homeowner. The cap is a percentage of the total contract price, and several states apply a lower percentage once the contract value crosses a threshold.

These caps are statutory maxima from each state's domestic building legislation, not ACL provisions. The figures for WA, TAS, NT and ACT should be confirmed with the relevant state or territory regulator before relying on them in a contract. For a practical walkthrough of how to ask for and structure your deposit, see our guide to taking a deposit as a tradie.

Do I need home warranty insurance before taking a deposit?

Yes. In every state and territory except Tasmania, a builder must have home warranty insurance (or the equivalent state scheme) in place before accepting any payment, including the deposit, or starting work on site. The insurance protects the homeowner if the builder dies, disappears or becomes insolvent, and the builder cannot enforce the contract without it.

The dollar thresholds that trigger the requirement vary:

• NSW. Residential work over $20,000 requires cover through the Home Building Compensation Fund (icare)
• VIC. Domestic work over $16,000 requires Domestic Building Insurance, and the VBA must suspend a practitioner whose cover lapses
• QLD. Residential work over $3,300 is covered by the Queensland Home Warranty Scheme (QBCC)
• SA. Building Indemnity Insurance triggers at $20,000 or more (from 10/11/2025)
• WA. Home Indemnity Insurance triggers for residential work over $20,000
• TAS. Tasmania has no mandatory home warranty scheme, the only state without one

In Victoria, a builder who takes a deposit without Domestic Building Insurance cannot enforce the contract and cannot start work. For the full state-by-state breakdown of when home warranty insurance kicks in, see our home warranty insurance guide.

When does a building job need a written contract?

State legislation requires a written, signed building contract above a set dollar threshold. The contract must include the deposit amount, the scope of work, the progress payment schedule and the expected completion date. Taking a deposit without a compliant written contract can make the contract unenforceable and trigger penalties.

• NSW. Written contract required for residential building work over $5,000, with a simplified small-jobs form for work between $5,000 and $20,000 and a full home building contract above $20,000
• VIC. A major domestic building contract is required in writing above the prescribed value
• QLD. QBCC requires a written contract for licensed building work over $3,300, with Level 1 and Level 2 contract tiers
• TAS. Written contract required for residential building work over $20,000 under the Residential Building Work Contracts and Dispute Resolution Act 2016

Variations to the contract must also be in writing and signed by both parties before the varied work proceeds. Verbal variations are the single biggest source of disputes and unrecovered margin in building and construction. If a customer keeps adding scope, see our guide to handling scope creep.

What happens if I take more than the legal deposit cap?

Exceeding the deposit cap is an offence under state building legislation. The consequences vary by jurisdiction but typically include:

• Contract unenforceability. In Victoria, a builder who demands or receives a deposit above the cap cannot enforce the contract against the homeowner
• Fines. State building Acts carry penalty-unit-based fines for exceeding the deposit cap, with higher maxima for corporations than individuals
• Licence action. The state licensing authority (NSW Fair Trading, VBA, QBCC, or equivalent) can suspend or cancel a builder's licence for deposit and insurance breaches
• Tribunal orders. State tribunals (NCAT, VCAT, QCAT and equivalents) can order the builder to refund the excess and pay compensation

On top of the state building legislation, the Australian Consumer Law adds a second layer. Demanding an excessive deposit could amount to misleading or deceptive conduct under ACL s 18 or a false representation under ACL s 29 if the homeowner was led to believe the amount was standard or legally required. Civil penalty maxima for ACL contraventions are the greater of $100,000,000, three times the benefit obtained, or 30% of adjusted turnover for companies (from 28/03/2026), and up to $2,500,000 per contravention for individuals. These are statutory maxima for context only, not a prediction for any specific matter.

How do unfair contract terms affect deposit clauses?

"From 9 November 2023, it is unlawful to propose, apply, rely on, or enforce an unfair contract term in a standard form consumer or small business contract." (ACCC, Unfair contract terms guidance)

This reform directly affects the deposit and cancellation clauses in a builder's standard quote or contract template. A term is likely unfair if it:

• Forfeits the entire deposit on cancellation. A clause that lets the builder keep the full deposit regardless of costs incurred is likely to cause a significant imbalance in the parties' rights
• Allows unilateral price increases. A clause that lets the builder raise the price (and therefore the deposit obligation) without the homeowner's agreement
• Restricts the homeowner's right to terminate. Overly broad cancellation penalties that go beyond compensating the builder for work done and costs committed

Each unfair term is a separate contravention carrying its own civil penalty, so a single contract template used across a customer base can create compounding exposure. If your standard quote or contract template was written before November 2023, have it reviewed by a lawyer. For a broader look at advertising and contract compliance for tradies, see our ACL compliance guide.

What are the rules for progress payments after the deposit?

Once work begins, payments should follow the progress of the work, not run ahead of it. State domestic building legislation prescribes how progress payments work on contracts above the written-contract threshold.

• Stage-based claims. Residential building contracts typically set milestone stages: base or slab, frame, lock-up, fixing and completion. Each progress claim corresponds to a completed stage
• NSW. All contracts over $20,000 require a progress payment schedule, payments must match work completed, and cost-plus claims must be supported by receipts
• Over-claiming. Demanding payment ahead of the stage of completion is a breach under most state Acts and a common source of tribunal claims

Security of Payment legislation in every state also gives builders and subcontractors a statutory right to progress payments and a fast adjudication process to recover disputed amounts. If a customer is not paying on time, see our guide to handling unpaid invoices and our small claims tribunal guide.