$25,000 Home Builder Grant Scheme Announced

The Federal Government has announced a new Home Builder grant scheme, providing eligible owner-occupiers (including first home buyers) with a tax-free grant of $25,000 to encourage people to build a new home or substantially renovate their existing home.

The Home Builder grant is only available on building contracts signed between 4 June 2020 and 31 December 2020, and construction must begin within 3 months of the contract date.

The Home Builder grants will be distributed by the revenue office of the State or Territory where you live, or plan to live, on behalf of the Australian Government, which will be the State Revenue Office ( SRO ) in Victoria.

There are a few complexities to consider for the Home Builder grants, for both home builders/renovators and the building industry in general, and we recommend that all of these issues are considered in detail before signing a new contract on the expectation that the Home Builder grant will apply.

Eligibility criteria

Various eligibility criteria apply to those individuals applying for the Home Builder grant and the builders engaged to complete the building project.

Individual applicant eligibility

The Home Builder scheme is available to owner occupiers, including first home buyers, but it is not accessible to owner builders, developers or investors.

To be eligible you need to be:

An individual (not a company or trust); and
18 years of age or older; and
An Australian citizen (not for non-residents, permanent residents or New Zealand citizens).

The individual applicant will also need to meet the income test, which states you cannot earn more than:

Individuals - $125,000 based on your 2018-19 or later tax return; or
Couples - $200,000 based on both of your 2018-19 or later tax returns.

The income limit is based on your gross income, before tax and excluding superannuation. The easiest way to confirm your income with your 2019 Notice of Assessment, which shows your taxable income for the 2018-2019 financial year.

The Government has noted that the gross income threshold will be tested against your most recent lodged tax return. We note that the Home Builder grant will likely be a self-assessment application process, so if the SRO later identifies that your income exceeds the thresholds above (even as a result of a subsequent amended 2019 tax assessment), you may be required to repay the $25,000 grant payment.

The building project eligibility

The building contract must be signed between 4 June 2020 and 31 December 2020, and the construction or renovation must commence within three months of the contract date.

The grants are available if you build a new home or renovate a home to live in (your principal place of residence) where:

For " new home " (incl. house, apartment, house and land package, off-the-plan, etc) construction - the property value (house and land) does not exceed $750,000; or

For " renovation works " (incl. renovation works must be to "improve the accessibility, liveability and safety" of the dwelling) completed to substantially renovate your existing home - where:

The renovation contract is between $150,000 and $750,000, and

The value of your existing property (house and land) does not exceed $1.5 million

We note that "renovation works" must be made to "improve the accessibility, liveability and safety" of the dwelling, and cannot be for additions to the property (such as swimming pools, tennis courts, outdoor spas and saunas, sheds or garages (unconnected to the property)).

If you own or have purchased land but have not signed a contract to build your home, you may meet the eligibility criteria if you:

Own a property (house and land), and demolish the house to rebuild a new dwelling – this will be counted as a substantial renovation, and therefore subject to the "renovation works" price range of $150,000 to $750,000 provided the total value (house and land) of the property does not exceed $1.5 million pre-renovation;

Own vacant land before 4 June 2020, and then build – the total value of the land and new build cannot exceed $750,000; or

Buy the land after 4 June 2020, and then build – the total value of the land and build cannot exceed $750,000.

Building contract integrity measures

Building contracts must be agreed at arms-length rates , that is, the parties cannot be related, connected or between two parties not freely independent of each other. Renovations or building work must be undertaken by a registered or licenced builder and have a currently valid building licence or permit.

We note that you cannot be an owner builder, individually employ tradespeople to complete the renovations, or use a contract from earlier than 4 June 2020 even if construction has not started yet.

In relation to the pricing requirements, the terms of the building contract should be commercially reasonable, and the contract price should not be inflated compared to the fair market price. The rules enable the purchaser to request that the builder demonstrate that the contract price for the new build or substantial renovation is no more than a comparable product (measured by quality, location and size) as at 1 July 2019.

Interaction with first home owner grant scheme

The Home Builder grant does not exclude first home buyers from accessing other grants and concessions such as the First Home Owner Grant, stamp duty concessions, the First Home Loan Deposit Scheme, and First Home Super Saver Scheme.

Timing issues to consider

We note that payment timing of the $25,000 Home Builder grant has not been confirmed by the Government at this time. If you are entering into your building contract before the Home Builder grant is paid out, we recommend you consider whether the access to the $25,000 grant payment is not essential for you to be able to complete and finance the building project.

We also note that the $25,000 Home Builder grant should not be relied upon to fund the deposit for the building project, for the same timing reason explained above.

Finally, as the builder/contractor needs to commence building works within three months of the contract date, so it will be important to make certain that the contract clearly recognises the commencement dates.

What is the application process & what documentation should be provided?

You will be able to apply for Home Builder grant through your relevant State or Territory revenue office or equivalent authority, once the State or Territory Government that you live in (or plan to live in) signs the National Partnership Agreement.

The State or Territory revenue office (ie. the SRO in Victoria) will require certain documents to process an application, and it is currently understood (at a minimum) that you will need to provide the following information/documentation:

Proof of identity;
A copy of the building contract, dated and signed by you and the registered or licenced builder;
A copy of the builder's registration or licence (depending on the state you live in);
A copy of your 2018-19 tax return (or later) to demonstrate your eligibility against the income cap; and
Documents such as council approvals, building contracts or occupation certificates and evidence of land value.

________________________________________________________________

Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further

________________________________________________________________

< Older Post

Newer Post >

Audit Lowe Down – Contracts often include price variations relating to bonuses / penalties / rebates – why do we need to consider these early?

July 28, 2025

Contracts often include price variations relating to bonuses / penalties / rebates – why do we need to consider these early? Many revenue streams are covered by AASB 15 Revenue from Contracts with Customers. The core principle of this standard is ‘that an entity shall recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.’ [emphasis added]. To determine what we expect to receive, all elements of the contract that are not fixed need to be reviewed. We need to review contracts for: Volume discounts Rebates Refunds Performance bonuses Penalties Price concessions Once we have identified variable consideration then we need to estimate the amount expected to be received using either: the expected amount using a probability weighted average of the likely outcomes or the most likely outcome. The method chosen is the one deemed to be the best estimate of the expected consideration, and the amounts may be updated at each reporting date. Once the consideration has been determined, the entity recognises only the revenue that is highly probable will occur – this is known as the constraint on revenue recognition. Practically, the requirements discussed above for variable consideration are relevant only where an entity satisfies the requirements for revenue recognition over time and contract crosses a reporting date. As the estimate of the variable consideration changes, there may need to be a catch-up adjustment on previous revenue recognition for that contract.

Tax Alert - New Tax Agent Obligations from 1 July 2025

July 21, 2025

New Tax Agent Obligations from 1 July 2025 From 1 July 2025, “small” firms of tax practitioners (with 100 or less employees) must ensure they are complying with the eight new Code of Professional Conduct obligations from the Tax Practitioners Board ( TPB ). These new Code obligations were introduced by the Government under the Tax Agent Services (Code of Professional Conduct) Determination 2024. The new Code obligations have already commenced for large tax practitioners (with over 100 employees) from 1 January 2025. As tax agents, Lowe Lippmann Chartered Accountants are committed to upholding our professional and regulatory obligations, including with the Tax Agent Services Act 2009 which includes the Code of Professional Conduct as regulated by the TPB.

Audit Lowe Down – Related parties – what should I consider in identifying them?

July 16, 2025

Related parties – what should I consider in identifying them? Related party disclosures is an area that is receiving more scrutiny from stakeholders in both the for-profit and the not-for-profit space. Disclosure of transactions that have occurred with related parties are important since the terms and conditions are often different from those with unrelated parties, in some instances the transactions may have occurred for much lower or even nil consideration. Often one of the biggest challenges for compiling the disclosures is working out who is a related party of an entity. The definition of related parties in AASB 124 Related Party Disclosures is detailed, however we have summarised the definition into various elements below. a. Think about entities who might be related to the reporting entity i.e.: i. through control or significant influence, ii. by the existence of material transactions or iii. dependence on technical information or personnel provided by them. b. Think about people who might be related to the reporting entity, i.e.: i. Key management personnel, including all directors. ii. Close family members of key management personnel (e.g. spouse, child). c. Think about entities that the people identified in b. might control or significant influence, i.e.: i. Family businesses ii. Businesses which a close family member controls (i.e. senior partner in a legal or accounting firm). Once you have identified a complete list of who is potentially a related party, analysis can then be performed to confirm they meet the criteria in AASB 124 and then identify any transactions with these parties. Remember that transactions should be included whether or not a price was charged or whether the transaction was formally documented or not.