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I am trying to understand long service levy fee.....

Discussion in 'Development' started by Tenex, 6th Feb, 2016.

  1. Tenex

    Tenex Well-Known Member

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    It may sound like a rant but I almost fell off my chair when I read what long service levy is and how much it costs.

    If I understand correctly, when you want to develop something, in addition to all the dozen different costs that state and local governments have invented to charge you, you have to pay for the workers so they can go on a long service holiday? and the irony is their employer who makes money off them doesnt have to pay this but the person who is paying their employer has to pay this as well.

    It's very hard to understand after paying tens of thousands of dollars for all kind of colorful contribution and admin fees you have to pay yet another fee that is based on a 500 year old policy of sending UK workers back to their country for a holiday.
     
  2. MTR

    MTR Well-Known Member Premium Member

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    Sounds fair... that's a joke, never heard of this one, what next:eek:
     
  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    It's only for building industry if I'm not mistaken? You pay a small percentage to a govt fund for projects you do over 25k and then they use that to pay for workers who have worked 10 yrs and earned their break.

    Its far less of a rort than what public servants are on.
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    The building industry long service scheme was established by act of Parliament over 30 years ago in response to LSL being available to all office workers however as the construction industry suffers from largely contract and subcontracting most workers would be ineligible for lsl as you're required to have 10 years continuous service with one employer. Portable LSL allows workers to change employer without losing continuity of service to the industry.

    It is administered by the construction industry Long Service Payments Corporation.

    Your 0.5% of the undervalued amount put on the DA goes a long way towards covering all construction workers registered under the scheme.
     
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  5. Nemo30

    Nemo30 Well-Known Member

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    What rort are public servants on?
     
  6. Scott No Mates

    Scott No Mates Well-Known Member

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    They get paid.
     
  7. Tools

    Tools Active Member

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    Presumably that is only a NSW thing. In Vic the scheme is run by Coinvest and it is paid by the employer or the contractor themselves (If the contractor so desires).

    Tools
     
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  8. MTR

    MTR Well-Known Member Premium Member

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    Its called a sheltered workshop
     
  9. Cactus

    Cactus Well-Known Member

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    It's a form of welfare.
     
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    Also a Qld thing as well.
     
  11. Tenex

    Tenex Well-Known Member

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    You can't undervalue it these days or your DA wont get approved.

    Basically for the construction of a simple house / duplex these days, given the cost of build, you could be looking at paying $3500 or higher in addition to all the other fees.

    It's not that construction people shouldn't get paid but there are a few problems with the whole scheme.

    Firstly you are paying a contractor to do the job and then that contractor directly benefits from his employees or contractors to do their job. Why do you then have to pay another fee towards the benefit of their employees rather than the employer being responsible for that fee?

    Secondly the premise of long service levy is based on a very old policy of attracting foreign workers (mostly from UK) to come to Australia and work so they can get paid extra to go on an extra long holiday. In today's economics it is meaningless and given all the free trade agreements that we are signing with a smile on our face, Chinese contractors will annihilate our local economy if we continue with this type of policies.

    Also as others have pointed out, the money may or may not even end up with people who deserve having it.
     
  12. Scott No Mates

    Scott No Mates Well-Known Member

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    1. $3,500 in levy equates to a $1m project - a little more than your average project home. The rate is 0.35% not 0.5% as was previously the rate & 0.475% (up to $1B) in Qld
    2. The industry only raised issues when the levy was paid by the builder but there's no longer an issue as it is paid by the developer before the DA is released
    3. Most employees in the construction industry are contractors and subcontractors with decreasing numbers of direct employees. As a consequence very few workers in the industry would be eligible for LSL a right for all employees with more than 5 years continuous service to ONE employer.
    4. The construction industry awards are based on a daily award system so if a part of a contract is completed, employees are terminated on 8 hours notice. The biggest differential is that the scheme is portable and it is service to the industry not to an employer.
    5. You are under a misguided premise about being able to attract foreign workers. All industries have access to LSL, construction has portability.
     
    Last edited: 8th Feb, 2016
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  13. Tenex

    Tenex Well-Known Member

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    $1m is the price of a dual occupancy these days and no you can't undervalue it or the DA wont get approved. A home these days can easily cost at or above 800k. You would be looking at the there abouts of the figure I quoted above.

    I dont mind where the money ends up or if the government wants to send people on a holiday to Disneyland. The premise of my post is that anyone who is developing, is paying a fee to an employer / contractor for the works. They should not also contribute towards a long service levy or anything else that directly or indirectly benefits workers in the industry Period

    I am very well aware of the LSL in all industries. In fact we bring IT people from the UK who have had LSL and other forms of tax levies for a while.

    Firstly you will find that this money is usually either paid to them in the form of extra tax return and not collected from the end users of their services OR paid to them by the employer.
     
  14. Leo2413

    Leo2413 Well-Known Member Premium Member

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    When i saw my LSL fee, I just paid it. No use worrying about something that isn't going to change. It seems everyone wants a slice of the cake (in this case not big). As long as my slice is the biggest and is enough for the project, I just pay it. No choice.

    Edit: I remember i actually was grateful and running to pay it just so my bloody DA could get approved without further delay lol
     
    Last edited: 8th Feb, 2016
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  15. Scott No Mates

    Scott No Mates Well-Known Member

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    In construction you get paid by the LSL corporation and you pay tax on it.

    If the employer was made to pay the LSL levy you'd find no employees working with continuous service of more than 5 years. A high % of building companies and developers only last the length of the project so won't exist when it comes time to contribute to the workers.

    This is the most equitable way of providing the payment - would you rather have the builder pay and put the margin on top of the levy? You'd be worse off again.
     
  16. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The LSL levy is collected by councils as a tax on the construction value of approvals that funds the LSL of tradesmen who ultimately perform the work. Tradies submit an annual notification and the LSL Corp accrues their respective entitlement regardless of who they were employed with etc. Self employed tradies "claim" their entitlement. It given them similiar standing as a employee worker say for a bank. When the tradies "take" LSL a payment is received by their employer entity to discharge that entitlement (or some of it). Tradies who do this get an annual certificate and it shows their accrued leave entitlement which is based on turnover (converted to hours by a mystery formula). The more $ you do the more you collect in hours. It doesnt benefit cashies. There is a overlap with the official LSL system so workers dont get both if they work for a employer and meet eligibility twice.

    Tradies are largely a migrating workforce and small businesses. This gives them a degree of equality and access to LSL. Its lost its relevance somewhat in this era of casual and part time worke in services such as tourism, hotels and restaurants etc.
     
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  17. Tenex

    Tenex Well-Known Member

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    There is an application fee that the council collects which is based off the value of the development. The council also collects the contribution fee and a number of other admin fees (depending on the actual council) for different reasons.

    You also pay GST on the development and the developer should pay tax on their income and if you earn money from that development you should also pay income / capital gains tax. I don't think nominating this levy as another form of tax is a good idea. It's simply a "we take it because we can" scheme. The irony is that the tradesmen may not even get the money.


    As I have said before, now that all of these free trade agreements are in place, if Australia continues to have this bureaucracy in place in 10 years time you will find cheap foreign labour will flood this country and will do the same work for a fraction of the cost while our government is too busy collecting levies.

    But if people think it is a good and sound policy then so be it. Let's invent more levies, one for every important occasion :)
     
    Last edited: 8th Feb, 2016
  18. Scott No Mates

    Scott No Mates Well-Known Member

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    This isn't a government levy.

    The tradies do get it, provided that they're registered.
     
  19. Be Developer

    Be Developer Property Developer Business Member

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    @Tenex

    Save ranting for Utility companies' jargon and hurdles they make you jump to get final OC!
     
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  20. Nemo30

    Nemo30 Well-Known Member

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    those public servants people laughed at up above actively monitor and police foreign workers. There isn't going to be a 'flood'.