The Building Act 1993 (the Building Act) requires building permit applications to include the cost of the building work (CoW), including the cost of labour and materials, for which the building permit is sought.
The BPC then calculates the Building Permit Levy (BPL) payable based on the CoW.
New method for calculating the cost of the building work
From 26 November 2025, a new method for calculating CoW will be required for building permit applications.
Following the passing of the State Taxation Further Amendment Act 2025, the Building Act has been amended to clarify and provide certainty on how the BPL is calculated.
From 26 November 2025
Calculating CoW
The building permit applicant must calculate and provide the required values for each component of the CoW formula as part of the building permit application. The relevant building surveyor (RBS) then uses this information to calculate the CoW to ensure the correct BPL is paid.
If the RBS is not provided with the information required by the Form1, or they have concerns about the suitability or accuracy of the information supplied, they can refuse the building permit.
If the information looks reasonable, the RBS is not obligated to review the contract details, including the applicant’s breakdown of contract costs or chattel calculations. Their role is to calculate the CoW using the figures provided in the Form 1, so the correct BPL is paid.
It is the applicant’s responsibility to ensure the information in their building permit application is true, accurate and not misleading.
RBS power to refuse building permit applications
Under the new legislation, an RBS can refuse a building permit application if they reasonably believe the information provided is materially incorrect. This includes the following:
The contract price or agreed amount, or the builder’s estimate of the total amount payable for the work, is substantially lower than what is normally payable for that kind of building work.
The cost of any chattel listed in the application is substantially higher than the normal cost of that type of item.
The application contains materially false or misleading information.
The application does not include the required information, such as:
The contract price or agreed price
The builder’s estimate under a cost-plus contract or agreement
The cost of any chattel
Information required for a staged permit, including the total CoW relevant to a staged permit.
Additional requirements for owner-builder applications
If the permit application is for an owner-builder, the RBS must refuse the application if they are satisfied that either:
The owner-builder's estimate of the building work is substantially lower than the normal cost of carrying out that kind of work.
The contractor agreed amount for any builder, trade or subcontractor engaged by the owner-builder is substantially lower than the amount normally payable for that kind of work.
Determining whether the CoW has been undervalued
The RBS must consider whether the CoW has been undervalued to deliberately minimise the BPL payable.
One way an applicant may attempt to mislead the RBS is by inflating the cost of chattels, which can make the declared CoW appear lower than it actually is.
Prior to 26 November 2025
Estimating CoW
Prior to 26 November 2025, building permit applications were required to specify the contract price or provide sufficient information for the RBS to estimate the CoW.
Building permits accepted before changes
Building permit applications accepted by an RBS prior to 26 November 2025 will have the old method of estimating the cost of building work apply to them.
Additionally, the old laws will continue to apply for a reassessment by the BPC of permit applications accepted by RBS prior to 26 November 2025.
When applying for a building permit
The applicant for a building permit (including for staged permits) is required to specify the following cost breakdown in the application form:
Type of contracts
Information to be submitted to the RBS
Contract price
Contract price to be paid to the builder
Cost of chattel
Cost plus contract
Contract price to be paid to the builder
Cost of chattel
Owner-builder
Estimate the cost of the building work (labour and materials) carried out by the owner
Cost of chattel
Where applicable, in addition to the above, include:
Cost of contract if the owner were to engage a subcontractor or trades, e.g. tiler, plumber, electrician
Estimate of cost plus contract
Cost of chattel
Note:
The required information above needs to specify the cost of the building work for each class of building where more than one building class is applicable.
For staged permits, the information submitted to the RBS needs to reflect the relevant stage
Calculating CoW – The new formula
The formulas below must be used for calculating CoW from 26 November 2025. GST must be included in all amounts.
In their simplest form, the formulas can be expressed as:
Types of contracts
Formula for calculation (all amounts include GST)
Contract price
Calculated cost of the building work = (equals)
Contract(s) amount (including labour + materials)
- (minus)
Chattels
Cost plus contract
Calculated cost of the building work = (equals)
Cost plus contract (s) (estimate amount that the builder will receive)
- (minus)
Chattels
Owner-builder (work carried out by owner without subcontractors)
Estimated cost of the building work = (equals)
Estimated labour (by owner)
+ (plus)
Materials
- (minus)
Chattels
Owner-builder (works carried out by subcontractors)
Calculated cost of the building work = (equals)
Aggregate contract amounts including (labour + materials)
- (minus)
Chattels
Owner-builder (work carried out by owner and subcontractors)
Estimated cost of the building work = (equals)
Estimate labour (by owner)
+ (plus)
Materials
+ (plus)
Contract price and/or cost plus contract
- (minus)
Chattels
Excluded items
Prescribed excluded items
The regulations do not currently prescribe any excluded items.
Chattels
The cost of a chattel can be excluded from the CoW only if it meets both following criteria:
a moveable item
not required for compliance with standards, the National Construction Code (NCC) and the relevant regulations.
Find three examples below to assist with applying the above definition.
Deemed not a chattel for CoW
A portable fire extinguisher is required to be provided within an office fit-out under the NCC. These are moveable items, however, given they are required under the NCC they are deemed not a chattel when calculating CoW.
A movable ramp approved as part of a performance solution for accessibility requirements is deemed not a chattel when calculating CoW.
Deemed a chattel for CoW
A movable kitchen island bench in an apartment or dwelling (that does not include electrical and plumbing fixtures) is deemed a chattel as it is movable and is not required under the NCC to achieve compliance.
Further examples of chattels
Example of proposed works
Chattels
Not chattels
Fit out of commercial tenancy, e.g, restaurant, office
Building services, sanitary facility fixtures, built-in furniture, built-in lockers, front office counter, and fixed whiteboards.
Form 1 – Application for a building permit
A revised Form 1 template must be used from 26 November so the applicant can accurately provide the information required for the RBS to calculate the CoW.
The updated Form 1 now requires specific information relating to the calculating of CoW.
Changes to the Form 1
Application made by a person other than an owner-builder
Part A
Is there a contract or agreement (other than a cost-plus contract or agreement) with a builder for carrying out the building work? Yes/No
If yes, specify the contract price or agreed amount to be paid to the builder (including for the cost of labour and materials) under the contract or agreement
If no, is there a cost-plus contract or agreement with a builder for carrying out the building work? Yes/No
If yes, specify the builder's estimate of the total amount that the builder will receive or is likely to receive (including for the cost of labour and materials) under the contract or agreement
Specify the cost of any chattel under the contract or agreement
Part B
Specify the class or classes of building to which the building work relates:
Does the building work relate to both:
(i) one or more buildings in a class 2, 3, 4, 5, 6, 7 or 8 building; and (ii) one or more buildings in a class 1, 9 or 10 building? Yes/No
If yes, specify the information required under Part A and under Part C (if applicable) according to whether the building work relates to: (i) buildings in a class 2, 3, 4, 5, 6, 7 or 8 building; and (ii) buildings in a class 1, 9 or 10 building.
Part C
For this stage of building work instead of all stages of staged building work:
Does the application relate to a stage of the whole of the building work? Yes/No
If yes, specify the extent of the stage:
Is there a contract or agreement (other than a cost-plus contract or agreement) for carrying out the whole of the building work for all of the stages? Yes/No
If yes, specify the contract price or agreed amount to be paid to the builder (including for the cost of labour and materials) under the contract or agreement
If no, is there a cost-plus contract or agreement with a builder for carrying out the whole of the building work for all of the stages? Yes/No
If yes, specify the builder's estimate of the total amount that the builder will receive or is likely to receive (including for the cost of labour and materials) under the contract or agreement
Specify the cost of any chattel under the contract or agreement
Application made by an owner-builder
Part A
I intend to carry out the building work as an owner-builder Yes/No
Specify the owner-builder certificate of consent number (if applicable):
Specify the owner-builder's estimated cost (including for labour and materials) of the owner-builder carrying out the building work
Part B
Will the owner-builder be engaging one or more builders to carry out part of the building work? Yes/No
If yes, specify the information in relation to whichever of the following applies:
(i) if the engagement is under a contract or agreement that is not a cost-plus contract or agreement, specify the contract price or agreed amount to be paid to each builder (including for the cost of labour and materials)
(ii) if the engagement is under a cost-plus contract or agreement, specify the contractor's estimated amount that each builder will receive or is likely to receive (including for the cost of labour and materials)
Part C
Specify the cost of any chattel relating to Part A and/or Part B
Part D
All stages of staged building work by an owner-builder:
Does the application relate to a stage of the whole of the building work? Yes/No
If yes, specify the extent of the stage:
Specify the owner-builder's estimated cost (including for labour and materials) of the owner-builder carrying out the whole of the building work for all stages
Specify the cost of any chattel in relation to building work carried out by the owner-builder
Is there a contract or agreement (other than a cost-plus contract or agreement) with a builder to carry out part of the whole of the building work for all stages? Yes/No
If yes, specify the contract price or agreed amount to be paid to the builder (including for the cost of labour and materials) under the contract or agreement
If no, is there a cost-plus contract or agreement with a builder to carry out part of the whole of the building work for all stages? Yes/No
If yes, specify the builder's estimate of the total amount that the builder will receive or is likely to receive (including for the cost of labour and materials) under the contract or agreement
Specify the cost of any chattel under the contract or agreement
Part E
Specify the class or classes of building to which the building work relates:
Does the building work relate to both:
(i) one or more buildings in a class 2, 3, 4, 5, 6, 7 or 8 building; and
(ii) one or more buildings in a class 1, 9 or 10 building? Yes/No
If yes, specify the information required under Part A and/or Part B (if applicable) and under Part C and Part D (if applicable) according to whether the building work relates to:
(i) buildings in a class 2, 3, 4, 5, 6, 7 or 8 building; and
(ii) buildings in a class 1, 9 or 10 building.
Update to BAMS – Building permit lodgement
Please be aware that BAMS will be updated to reflect the change in early 2026.
Until BAMS is updated, building permit number applications that use a calculated CoW are required to be entered into the estimated cost of building work field.
The BPC will work with building permit software providers to make relevant changes in the coming months.
Frequently asked questions
Understanding the changes
Our FAQ and website will be updated regularly to ensure you have the latest information. Please visit frequently for updates.
The changes took effect from 26 November 2025 without a transitional period.
Building permit applications accepted by an RBS prior to 26 November 2025 will have the old method of estimating the cost of building work apply to them.
A building permit that is issued in non-compliance with this new requirement may be considered invalid. The RBS will be in breach of their duties under S24(e) of the Act.
Following the passing of the State Taxation Further Amendment Act 2025, the Building Act has been amended to clarify and provide certainty on how the BPL is calculated.
This is now a requirement under the Building Act, and the issuance of a building permit must comply with the provisions of the Act.
Yes.
The new CoW calculation method applies to building permit applications for spec homes.
A building permit is required for the alteration of essential safety measures (ESM) due to the installation of warehouse racking.
The cost of work associated with ESM building work needs to form part of the CoW calculation.
However, the warehouse racking materials and installation is considered to be a chattel for the reason it is moveable and not associated with a NCC requirement.
In the circumstances where the racking system is fixed, it needs to form part of the CoW calculation.
No.
Any legal proceedings on foot before 15 October 2025 are not affected by the retrospective validation provisions.
The building permit applicant is responsible for providing the required information via the Form 1 to the RBS.
Building permit levy
The Building Permit Levy must be paid before a building permit is issued if the CoW is calculated at more than $10,000. The BPC then calculates the BPL payable based on the CoW.
In Victoria, a building permit is required to carry out any building work (not including exempt building work), such as construction, alteration or the demolition of a building.
From 26 November 2025, the formula for calculating the CoW changed by replacing the estimated CoW by the RBS with the calculated CoW by the RBS.
For building permits with a calculated CoW more than $10,000, the BPL is calculated by using the CoW calculated by the RBS multiplied by the levy rates (general levy 0.00064 plus DBDRV levy of another 0.00064).
In addition, the cladding rectification levy (CRL) also applies if all of the following apply:
Building permit applications accepted by RBS from 1 January 2020
Building Code of Australia (BCA) class 2 to 8 building
Located in the Melbourne metropolitan area.
The CRL rate is determined by the cost of the whole of the building work (CoWoBW) calculated by the RBS:
$800k to $999,999
$1m to $1,499,999
$1.5m and above.
The reliance on RBS cost estimations has caused uncertainty about BPL calculations for the industry, the BPC and consumers.
The new method provides greater clarity and certainty on how the BPL is calculated by requiring the RBS to accurately calculate the CoW.
No.
An applicant is not required to pay the BPL within a certain timeframe. However, a building permit number will not be issued until the applicant pays the BPL.
Under the new legislation, a RBS can refuse a building permit application if they reasonably believe the information provided is materially incorrect. See the list of what can be refused.
Changes to the way the CoW is calculated
The Building Act 1993 (the Building Act) required building permit applications to specify the contract price or provide sufficient information for the relevant building surveyor (RBS) to estimate the cost of building work, including the cost of labour and materials, that the building permit was requested for.
The applicant will be required to provide the information via the Form 1, the RBS needs to calculate the CoW, using a formula that clearly sets out what is included and excluded.
The new formula must be used for calculating CoW from 26 November 2025.
Building permit applications accepted by a RBS prior to 26 November 2025 will have the old method of estimating the cost of building work apply to them.
Additionally, the old laws will continue to apply for any reassessment carried out by the BPC on permit applications accepted by an RBS prior to 26 November 2025.
When an owner-builder applies for a building permit they are taking responsibility for carrying out the building work themself, with or without the help of subcontractors. Because they are not entering into a contract with themself, no contract price can be used to calculate the CoW.
Instead, an owner-builder must estimate the building work cost, including the cost of chattels. Chattels will be deducted by the RBS when the CoW is calculated.
Owner-builders may still engage builders, trades or subcontractors to complete parts of the work. If they do:
The owner builder is recorded as the builder on the permit
They are responsible for all work carried out under the permit, including any work done by trades or subcontractors they engage.
Because of this, the formula for CoW for owner-builders must:
Include the cost of work the owner-builder will carry out themselves
Plus, the contract or agreement price (or estimated amount) for the builders/trades/sub-contractors they engage
Plus, GST
Minus, the cost of chattels.
Types of contracts
Formula for calculation (all amounts include GST)
Owner-builder (work carried out by owner without subcontractors)
Estimated cost of the building work = (equals)
Estimated labour (by owner)
+ (plus)
Materials
- (minus)
Chattels
Owner-builder (works carried out by subcontractors)
Calculated cost of the building work = (equals)
Aggregate contract amounts including (labour + materials)
- (minus)
Chattels
Owner-builder (work carried out by owner and subcontractors)
Estimated cost of the building work = (equals)
Estimate labour (by owner)
+ (plus)
Materials
+ (plus)
Contract price and/or cost plus contract
- (minus)
Chattels
The regulations do not currently prescribe any excluded items.
Yes, GST must be included in all amounts.
Future application of new stages will need to be calculated in accordance with the new method.
In certain circumstances, the BPC will use its powers to reassess the amount of the BPL payable in respect of a specific building permit. This may include when the CoW changes during construction and the BPC have been notified.
A decision by the Supreme Court in May 21 Pty Ltd versus the Building Appeals Board [2023] VSC 203 determined that the standard method used for estimating the cost of building work has not always complied with the method currently required by the Building Act 1993.
The May 21 case revealed uncertainty in how the formula used prior to 26 November 2025 was to be approached. The amendment attempts to address this uncertainty by validating all past estimates of the cost of building work and levy amounts calculated and imposed by the BPC.
The BPL will be validated for applications of building permits accepted by an RBS before 26 November 2025.
Relevant building surveyor
Yes.
The RBS can request a copy of the contract to be satisfied that the calculation of the CoW provided seems materially correct and accurate.
Yes.
The RBS can request further information to be satisfied that the CoW is accurate and reflects the proposed work.
The RBS may ask for a statement or supporting evidence from the architect, applicant, quantity surveyor or estimator to confirm the information provided.
Yes.
We strongly recommend that both the applicant and RBS keep this information recorded.
It’s important to note that these records are required to be given to the relevant council under section 30 of the Building Act 1993.
Where the building work spans both BCA Classes 2 to 8 and 1/9/10, applicants must provide the contract/estimate figures broken down by the relevant class grouping.
For each grouping, the RBS should deduct the associated chattel costs for that portion to arrive at the CoW attributable to that class group. This ensures the CoW you report for CRL/BAMS aligns to the correct classification segments.
Yes.
It's a legislative requirement to ensure the CoW is not reduced to deliberately minimise the amount of BPL paid.
Where chattels are included in the contract price when calculating the CoW, the cost of chattels is to be subtracted as outlined in the formula.
In circumstances where no chattels are included in the contract price, there is no requirement to subtract the cost of chattels from the contract price when calculating the CoW. It is the responsibility of the applicant to notify the RBS that the contract price does not include chattels and the responsibility of the RBS to keep records of this advice.
Yes.
Each stage of the permit under the Form 1 will need to specify relevant costs associated with contracts, cost plus contract and chattels.
If building work is necessary for the chattel, eg. plumbing and electrical work to install a dishwasher, this is included in the CoW.
Other aspects e.g. delivery of the dishwasher, would not be included as building work.
Completing Form 1
Owner‑builders must provide the total estimated cost of the building work, including:
The estimated cost of labour and materials for any work they carry out themselves.
The cost of any chattels.
No.
For owner builder cost of works estimations, an itemised breakdown is not required.
Form 1 is a prescribed form under Schedule 4 of the Building Regulations 2018, which means the required questions and structure of the form must not be altered in a way that changes their meaning or omits any mandatory information.
However, the Regulations do allow practitioners to present the form in a user‑friendly layout, provided that:
all prescribed questions remain word‑for‑word
the logical order of the form is retained
no additional wording is included that may alter or qualify the prescribed questions.
In addition to the prescribed form, the applicant can attach any additional information to support the cost of works.
Part B revolves around mixed‑class building work.
It recognises that different building classifications may fall under different levy calculations. So if a single permit application covers building work spanning across both classification groups, you must split the cost information accordingly.
Part B is only triggered if the building work relates to both:
(i) one or more buildings in Classes 2, 3, 4, 5, 6, 7 or 8 and
(ii) one or more buildings in Classes 1, 9 or 10.
If both conditions are 'Yes', you must provide the required cost information under Part A and Part C (if applicable).
If building works relate only to:
Class 1, 9 or 10 or
Class 2 - 8 only
then Part A (and Part C) are completed.
Note: Part C must be completed for any staged building permit, regardless of BCA classification.
The new Form 1 no longer includes a field for 'stage cost'.
Applicants can instead provide the stage cost as a separate attachment (eg. builder cost staged breakdown or applicant declaration, any supporting cost documentation needed for RBS to verify estimates).
Where Schedule 4 asks: 'Will the owner-builder be engaging one or more builders to carry out part of the building work?', builder refers to a registered building practitioner or person permitted under s.24A of the Building Act 1993.
Yes.
Preliminaries and overheads are required to be included as part of the CoW calculations.
CoW is not limited to just labour and materials - it is the total amount payable for the building work (except deductibles like chattels).
Preliminaries such as site establishment, temporary services, project management, supervision, site safety amenities etc., form part of the construction costs and form part of the contractor's pricing, necessary for the execution of the building work.
Yes.
Design fees in a design and construct contract are calculated as part of the cost of building work.
The building permit levy is calculated on the cost of building work associated with the building permit, not on the procurement model.
Where the owner has purchased materials which are fixed (eg. a benchtop) and form part of the building work, this would be included in the CoW calculation.
The builder's labour to install the benchtop and associated joinery would also be included in the CoW calculation.
Impact on BAMS
BAMS will reflect these changes in early 2026.
Until BAMS is updated, building permit applications that use a value for calculated CoW are required to be entered into the estimated cost of building work field.
Yes, you must still use BAMS to lodge building permit number (BPN) applications.
Until BAMS is updated, BPN applications that use a value for calculated CoW need to be entered into the estimated cost of work field.
There are no changes to the specifications for CSV files for lodging applications for building permit numbers.
The value for calculated CoW must be entered in the estimated cost of building work field for applications from 26 November 2025.
Updates to relevant field labels are planned for 2026 and will be delivered alongside other BAMS application upgrades.
The BPC will work with software providers to make these changes.
Enquiries and more questions
If you have any additional questions that aren’t answered in the FAQ above, please email them to CoWcalculation@bpc.vic.gov.au.
Although you won’t receive a direct response, any answers relevant to these changes will be added to the FAQ above. We encourage practitioners to regularly visit this web page for updates and to learn more.
