To mark the completion of Cladding Safety Victoria initiatives, the Cladding Rectification Levy component of the Building Permit Levy established as part of the Cladding Safety Victoria Act 2020 is to be repealed on 1 July 2026.
It will be replaced by a new component of the Building Permit Levy, which will only apply to certain building types in non-regional Victoria with a cost of building works of $1.5 million or more.
In July 2019, the State Government announced its intention to address combustible cladding through a program of grants to fund rectification works for high-risk buildings. The proposed funding arrangements for the grants included the introduction of changes to the building permit levy to raise $300 million (representing half of the $600 million funding announced) over the following 5 years.
Amendments to the Building Act 1993 in the Building Amendment (Cladding Rectification) Act 2019 will provide for the building permit levy to include an additional cladding levy component. This component is known as the cladding rectification levy. These amendments commenced on 1 January 2020.
Provisions that require building surveyors to calculate the amount of levy payable when applying for a building permit number have been repealed, removing some of the regulatory burden on relevant building surveyors (RBS). It is important to note that an RBS will still be required to provide us with information relating to prescribed events each month.
To find out more information on the legislative changes underpinning the additional levy, view the Building Amendment (Cladding Rectification) Act 2019 and Cladding Safety Victoria Act 2020 on the Victorian Legislation and Parliamentary Documents website.
Frequently asked questions
The cladding rectification levy (CRL) changes commenced on 1 February 2021 and apply retrospectively from 1 January 2020.
The CRL changes affect building permit number (BPN) applications accepted by a Relevant Building Surveyor on or after 1 January 2020.
From 1 February 2021 the CRL applies to all building permit number (BPN) applications submitted through BAMS on or after 1 January 2020 that meet the following criteria:
The Building Permit is for a building:
that is not, or will not be, in regional Victoria
that is, or will be of any of classes 2 to 8
that has a cost of building works that relate to class 2 to 8 of $800,000 or more.
CRL may be payable if a Building Permit Number (BPN) application submitted through BAMS on or after 1 January 2020 meets the following criteria:
The Building Permit is for a building:
that is not, or will not be, in regional Victoria
that is, or will be of any of classes 2 to 8
that has a cost of whole of building works of $800,000 or more.
You may be entitled to a refund of CRL paid on certain building works if you paid the building permit levy before 1 February 2021.
In order to calculate the total amount of CRL owed, you must provide the estimated cost of works (CoW) breakdown by Building Codes of Australia (BCA) Classification. If the amount owed is less than what you’ve already paid, you may be entitled to a partial CRL refund.
You must provide a breakdown of the estimated cost of works (CoW) by each BCA Classification of the building works in BAMS. This will allow us to calculate the CRL for components of the building works that relate to Classes 2 to 8.
If you are eligible for a levy exemption, please notify your Relevant Building Surveyor so they can indicate the exemption on the Building Permit Number application.
In July 2019, the State Government announced its intention to address combustible cladding through a program of grants to fund rectification works for high-risk buildings. The funding arrangements for the grants included the introduction of changes to the building permit levy to raise funds for those grants over the following 5 years.
Our role with regard to the Cladding Rectification Levy (Levy) is to facilitate the collection of funds and transfer them to Cladding Safety Victoria who manage the program of grants under the Cladding Rectification Program (Program). While the Program is set to run for five years the Levy itself is not subject to a time limit.
The Building Act 1993 requires that a review of the Levy be undertaken within 4 years of the Levy’s commencement. The review took place in December 2023 and found there was an ongoing need for the Levy.
We will continue to facilitate the collection of funds until we are advised by the Department of Transport and Planning that the Levy is to cease.
Application of the cladding rectification levy
The cladding rectification levy applies to buildings:
that are not located in 'regional Victoria' as defined in section 18(8) of the First Home Owner Grant Act 2000; and
that is, or will be of any of classes 2 to 8 under the National Construction Code (NCC); and
that have a cost of works or cost of whole of building works of $800,000 or more.
Note: The cladding rectification levy is payable in addition to the current building permit levy.
As provided by Building Code of Australia (BCA) – A6.11, a building (or part of a building) may be designed, constructed or adapted to multiple purposes and have more than one classification.
An application for a building permit must specify the CoW and the following information:
whether the building work relates to more than one class of building,
if the building work relates to more than one class of building, it must specify each class of building that the building work relates to; and
if the building work relates to more than one class of building, and those classes of building include one or more class of 2 to 8 and a class 1, 9 or 10 building, it must state:
the cost of the building work that relates to the class or classes of 2 to 8 building; and
the cost of the building work that relates to the class 1, 9 or 10 building.
Example
Under the current provisions, when constructing a Class 9 - health care facility, combined with Class 7 - Carpark, CRL would apply to the entire CoW. In contrast, from 1 February 2021, CRL will only apply to the portion of the building work related to Class 7.
An exemption from the cladding rectification levy will be available in relation to certain types of social housing.
No cladding rectification levy is payable if a building is not a multiple-purpose building and that building is only NCC class 1, 9 or 10.
Building works on Commonwealth Crown land retain the current exemption from any building permit levy, including the new cladding rectification levy.
‘Regional Victoria’ is defined by reference to the First Home Owner Grant Act 2000, which lists regional municipal councils and Alpine resorts included within the definition.
Buildings with a classification of 2 to 8 under the NCC are subject to the cladding rectification levy. Broadly, these classes are:
Class 2 – apartments
Class 3 – hotels
Class 4 – dwellings attached to commercial buildings
Class 5 – offices
Class 6 – shops
Class 7 – car parks and warehouses
Class 8 – laboratories and factories
If the building work involves multiple NCC class types, cost of the building work that relates to the class 1, 9 or 10 will be exempt from Cladding rectification levy.
For applicable buildings with a cost of works (single-stage project) or cost of building works (multiple stages of works) that relate to class 2 to 8 of $800,000 or more, the following rates of cladding rectification levy are payable.
Cost of works / Cost of whole of building works
Cladding rectification levy rate
Between $800,000 and $1 million
0.128 cents in the dollar
Between $1 million and $1.5 million
0.256 cents in the dollar
$1.5 million or more
0.82 cents in the dollar
The cladding rectification levy is calculated on the entire cost of works.
Certain social housing projects are exempt from the cladding rectification component of the building permit levy. This includes building permit applications that belong to any one of the following categories:
Social housing program delivered by the Director of Housing that will be then owned, controlled or managed by the Director; or
Social housing funded under an approved program that will be owned, controlled or managed by a participating agency.
Building works on Commonwealth Crown land retain the current exemption from any building permit levy, including the new cladding rectification levy.
Applications for a building permit number that are accepted by a Relevant Building Surveyor on or after the 1 January 2020.
The cladding rectification levy was repealed on 1 July 2026. All building permit number applications made by your relevant building surveyor to the BPC on or after 1 July 2026 will no longer incur cladding rectification levy. However, the building reform levy may apply on or after this date.
Estimation of cost of works and levy
Amendments to the Building Act 1993 repeal section 18AA(2)(c) and insert section 205I so that an RBS will no longer be required to calculate the levy payable.
The RBS retains responsibility for estimating the cost of the building work for which an application is sought (including the cost of labour and materials). However, in relation to staged permits, the RBS must also provide an estimate of the cost of whole of building work when each BPN is applied for.
On commencement of the new provisions, responsibility for calculating the levy payable will transfer to us, as will responsibility for communicating this to the applicant.
The reassessment powers previously introduced on 1 July 2019 will provide the process for the recovery of shortfall levy where final cost of works is more than the estimated cost of works.
There is no change to the RBS' duty to notify the applicant for a building permit of the estimated cost of works (section 205I of the Act).
RBS notification to the owner should take place on application for a BPN. The amount reported should match the amount entered into BAMS.
We will calculate the amount of building permit levy payable in relation to the cost of each stage of building work on application for a building permit for that stage.
This means we will use the RBS' estimate of the cost of works for a particular stage at the time of application for a building permit.
Amendments to the Building Act 1993 introduce a legislated refund power as part of the reassessment process (sections 205L(1A)(b) or (c), and section 205LBA). These refunds are limited to cladding rectification levy paid on staged permits where the cost of works is at least $15,625 below the estimated cost of works and either:
the estimate under section 205I(2) or (3) of the cost of whole of building work was incorrect; or
we consider the information provided in the application for the building permit was incorrect or misleading.
This new refund power can only be exercised after a building permit is issued. In relation to the timing of reassessments resulting in a refund being payable, we have discretion (under section 205L(1A) of the Act) to reassess the levy payable after the building permit for the final stage has been issued.
We will continue processing administrative refund requests for building permit levy paid before a building permit has been issued. A RBS may request an administrative refund:
after a BPN has been created in situations where a building practitioner is no longer registered, or an owner/applicant no longer wants to build or proceed with a build; or
after being issued with a BPN, where an administrative error has occurred when entering the levy into BAMS (e.g. $100,000 instead of $10,000) and too much levy has been paid.
We will not provide administrative refunds of building permit levy after a building permit has been issued.
Reassessment of levy
New subdivisions 4A and 4B – inserted in Division 2 of Part 12 of the Building Act 1993 – empower us to reassess the building permit levy for building permits issued on or after 1 July 2019.
We may reassess building permit levy after a building permit is issued and within five years of completion of work, where:
variation to the building work has resulted in an increased cost of building work
the estimated/calculated cost of works by the RBS was incorrect or
the information provided in the application for a building permit was incorrect or misleading.
Under section 205LD of the Building Act 1993, a person who is given a notice to pay additional levy under section 205LB(1)(a) must pay the additional amount of building permit levy and any penalty levy assigned within 14 days of the notice being given to the responsible person.
Revised final cost of works
Amendments to section 205KA of the Building Act 1993 remove the requirement to report on increased final costs of building work for staged building permits. The RBS will instead be required to report any variations to the cost of works each time a BPN application is made (see changes to section 205I).
The reporting requirement in section 205KA only applies to building permits issued on or after 1 July 2019.
The reporting duty remains unchanged in relation to non-staged building permits. Owners are still responsible for informing of the revised cost of works.
For building permit applications accepted by the relevant building surveyor (RBS) on or after 26 November 2025 that relate to amendment of the building permit, the owner is not required to notify the BPC of the revised cost work of the building work. Instead, the RBS is required to notify BPC of the revised cost work of the building work.
Owners/applicants should complete the relevant cost of works notification form on the At the end of your building project webpage, and submit. (Download the form to your computer before filling it in.)
A reimbursement of the building permit levy may be provided in circumstances where the levy was paid prior to the issue of a building permit and the application is withdrawn prior to the issue of the permit.
For building permits accepted by the RBS on or after 26 November 2025, the building permit applicant may request a reassessment of the cost of the building work if, in their view, the building permit levy should be decreased by at least $20 due to a variation to the building work. The applicant may make this request by downloading the form:
Note: We will not reimburse building permit levy if:
the building work does not proceed
the building work is partially completed
a building permit lapses or
a building permit is cancelled.
Payment is due 14 days after notice is given.
Unauthorised building work and other matters
Yes – the cladding rectification levy will also be payable when we exercise our powers to assess a levy for unauthorised building work that would otherwise be subject to the cladding rectification levy.
Our decision on the amount of cladding rectification levy refundable under the new refund power will be reviewable at VCAT.
Amendments to the Building Act 1993 include a legislated transfer of the rights of building owners who have received financial assistance from Cladding Safety Victoria to pay for cladding rectification works.
Subrogation is the process by which one party (in this case, the State of Victoria) is substituted for another, so that it may enforce the other's rights against a third party.
These amendments will allow the State Government to take legal action to recover costs of cladding rectification from building practitioners or others responsible for the installation of combustible cladding in place of owners.
