Questions for tariffs quarterly bulletin: Australia

Describe the taxes and duties regimes in your location’s standard form contracts

What are your standard form contracts?

The Australian construction industry has historically utilised a number of standard form contracts, most common being the long-standing suite developed by "Standards Australia", which includes (amongst others) the AS4300 (Design & Construct) and AS2124 (Construct Only) contracts. It is noted that, when using the "Australian Standards" contracts it is common to see these forms heavily amended when released to market.

Beyond these forms, a number of commonly used standard-form construction agreements have been developed by individual state governments for use by their agencies, including for example the popular "GC21 Contract" developed by the NSW Government, and the Victorian Government’s suite of approved "Victorian Public Construction Contracts" (noting these include both "approved" amendments to the Australian Standards, as well as bespoke contracts).

We have also seen the uptake of the FIDIC and NEC contract suites.

For the purposes of this review we will focus on the classic AS4300, and NSW’s GC21 Contract.

Which party bears the risk of taxes and duties?

• Before the contract is entered into: 
  AS4300 and GC21 are silent in relation to taxes and duties prior to entry into the Contract. The Contractor would be required to factor such amounts into its pricing prior to Contract. Note however the impact of the AS4300 "change in law" regime discussed below.
  
  
• After the contract is entered into: 
  AS4300 provide that the Principal shall bear the cost of any stamp duty payable on the Contract. Both AS4300 and GC21 are otherwise silent as to taxes and duties after the Contract is entered into (except for processes in relation to invoicing and paying Australia Goods and Services Tax (GST)).

 

If taxes and duties change after the contract is entered into, what relief, if any, is available under your location’s?

Standard form contracts? eg change in law provisions, force majeure

AS4300 includes a "Change in Legislative Requirement" regime which provides cost relief (and the possibility for time relief) for changes to Legislative Requirements that:

• necessitate a change to the works or an increase or decrease in a fee or charge or payment of a new fee or charge;
• have effect after the 14th day prior to the date of closing of tenders (Note: this may effectively give relief for changes occurring prior to entry into the Contract); and
• could not reasonably have been anticipated at that prior date, and which cause the Contractor to incur more or less cost than otherwise would have been incurred.

"Legislative Requirements" in the AS4300 are defined broadly to include, amongst other things, legislation (including Commonwealth Legislation), authority approvals and fees and charges payable in connection with the foregoing.

Provided that the relevant tax or duty is introduced via a relevant Legislative Requirement after entry into the contract, can be described as an increase in a fee or charge and otherwise satisfies the pre-requisites above, cost and time relief may be available to Contractors.

AS4300 does not include a force majeure concept.

GC21 includes a limited "Changes to Statutory Requirements" type clause which focusses on law changes which require a "change to work" rather than changes to fees and charges akin to AS4300.

GC21 does not include a force majeure concept.

Laws – statutes, case law

We are not aware of statutes or case law in Australia that would provide relief in the event that taxes or duties change after the contract is entered into.

 

For particular market segments in your location, what changes, if any, have employers or contractors made recently to the usual risk allocation?

As mentioned above, one example of changes to a standard form is the Victorian Government’s published "approved amendments" to AS4300 for use in Victorian public construction procurement. The March 2025 version of these amendments seek to limit the change in law relief under the standard AS4300 by adding additional requirements for the relevant change in law:

• to come into effect after the date of tender close; and
• to not be reasonably anticipated by an experienced, prudent and competent contractor.

and also including a process for the Principal to then direct the Contractor whether to perform the relevant change (to the extent permitted by law).

We would consider it common for principals to seek to include more restrictive change in law relief in comparison to the unamended standard form AS4300. In particular, we often see "principal-drafted" change in law clauses focussing on changes that impact the carrying out of the works themselves (similar to GC21) rather than general cost increases, or seeking to further limit change in law relief to changes which are directly aimed at the relevant industry or works themselves, rather than more general changes in law that effect "everyone" and are better characterised as "costs-of-doing-business".

In our experience, it is common for sophisticated contractors to seek to include both change in law and force majeure type relief where not otherwise included. This has become an increased focus point following the COVID-19 pandemic and other global supply chain disruptions.

We are seeing for the first time Contractors looking for price variance on steel and shipping costs. That’s a direct flow on of the market uncertainty created around the price of steel by tariffs and on shipping costs by geopolitical tensions.