You have agreed on a price with your tradie. The quote looks good, the licence checks out on TradieVerify, and you are ready to get started. But then comes the question that trips up most homeowners: how and when do you actually pay?
Getting tradie payment terms right protects your money and gives you leverage if something goes wrong. Get them wrong and you could hand over thousands before a tool hits the site, with no way to recover it if the tradie disappears. Australia has over 178,000 licensed tradespeople listed on TradieVerify, and the payment terms they offer vary from “pay on completion” for small jobs to staged milestone schedules for six-figure builds. This guide covers what is standard, what is legal, and what should worry you.
How Tradie Payment Terms Work in Australia
Tradie payment terms are the agreed schedule of when you pay, how much you pay, and what triggers each payment. For most residential work in Australia, payments fall into four categories.
- Deposit. A percentage of the contract price paid before work begins.
- Progress payments. Payments tied to completed stages of the project.
- Final payment. The last instalment, paid after the work is finished and you have inspected it.
- Retention. A small percentage held back to cover defect rectification after completion.
Not every job uses all four. A plumber replacing a tap will quote a fixed price and expect payment on completion. A builder constructing a granny flat will use deposits, staged progress payments, retention, and a final payment. The structure matches the size and duration of the job.
The golden rule. Payments should always follow completed work, never run ahead of it. If your tradie has received 60% of the contract price but only completed 30% of the work, you have a problem.
Deposit Caps by State and Territory
Every Australian state and territory sets rules on how much a tradie can ask for as a deposit. These caps exist to protect homeowners from losing large sums if a tradie fails to start the work, goes insolvent, or abandons the job.
| State/Territory | Maximum Deposit | Contract Value Threshold |
|---|---|---|
| QLD | 5% | Over $20,000 |
| QLD | 10% | $3,301 to $20,000 |
| QLD | 20% | $3,300 or less |
| VIC | 5% | $20,000 or more |
| VIC | 10% | Under $20,000 |
| NSW | 10% | Residential building work over $5,000 |
| WA | 6.5% | Home building work $7,500 to $500,000 |
| SA | No prescribed cap | Industry standard is 10% |
| ACT | No prescribed cap | Industry standard is 10% |
| TAS | 10% | Residential building work |
| NT | No prescribed cap | Industry standard is 10% |
Queensland exceptions. The QBCC allows a 20% deposit when more than 50% of the contract value involves off-site prefabrication. Custom kitchens, made-to-measure windows, and prefabricated sheds all qualify for this higher deposit because the tradie must purchase materials and begin manufacturing before arriving on site.
Victoria insurance rule. For building work over $16,000 in Victoria, the builder must provide domestic building insurance documentation before collecting any deposit. If they ask for money before handing over the insurance certificate, do not pay. See our home warranty insurance guide for full details.
What 10% looks like in practice. On a $30,000 bathroom renovation in NSW, the maximum deposit is $3,000. On the same job in WA, it is $1,950 (6.5%). On a $50,000 renovation in QLD, the cap drops to $2,500 (5%). These are maximums. Your tradie can ask for less, and many do.
Progress Payments: Paying as the Work Gets Done
Progress payments are the standard payment method for any residential project lasting more than a few days. Instead of paying a lump sum at the start or end, you pay in instalments as each stage of work is completed and inspected.
Why Progress Payments Protect You
Progress payments keep your money aligned with actual work. If the tradie has completed 40% of the build, they have received roughly 40% of the contract price. You are never significantly out of pocket relative to the value on site, and if something goes wrong, you have not overpaid for unfinished work.
Standard Progress Payment Stages
For new home builds and major renovations, HIA and Master Builders Association contracts use a standard five or six-stage payment schedule. Percentages vary by contract type and state, but a typical structure looks like this.
| Stage | What It Covers | Typical Payment |
|---|---|---|
| Deposit | Signed contract, before work begins | 5-10% |
| Base/Slab | Site preparation, footings, concrete slab poured | 15-20% |
| Frame | Wall frames erected, roof trusses installed | 20-25% |
| Lock-up | Roof sheeting, external cladding, windows and external doors fitted | 20-25% |
| Fixing | Internal fit-out: plasterboard, cabinetry, tiling, internal doors | 15-20% |
| Completion | Final finishes, handover, practical completion | 5-10% |
The QBCC 50% rule. In Queensland, your builder cannot claim more than 50% of the contract price (including the deposit) until at least 50% of the on-site work is complete. This prevents front-loading of payments and is one of the strongest homeowner protections in Australia.
Progress Payments for Smaller Jobs
Not every job needs a six-stage schedule. For projects under $20,000, a simpler structure works.
- Jobs under $5,000. Pay on completion. No deposit is necessary for most small jobs like tap replacements, power point installations, or minor repairs. If the tradie asks for a deposit on a $500 job, ask why.
- Jobs $5,000 to $20,000. A 10% deposit plus one or two progress payments tied to specific milestones, then a final payment on completion.
- Jobs over $20,000. Use the stage-based schedule above, adjusted for the scope of your project.
How to Verify Each Stage Before Paying
Never pay a progress claim without inspecting the completed stage first. Here is a practical checklist.
- Walk the site with the tradie. Ask them to show you what was completed in this stage.
- Compare against the contract. Has everything listed for this stage actually been done?
- Take photos. Photograph completed work at each stage. These become evidence if a dispute arises.
- Check for obvious defects. Crooked frames, cracked render, uneven tiling, gaps in cladding.
- Get an independent inspection. For builds over $50,000, hire an independent building inspector at key stages. Inspections cost $300 to $600 each and can save thousands by catching defects early.
Your right to withhold payment. If the stage is not complete or the work is defective, you can withhold payment until the issue is resolved. Once you pay, your leverage drops significantly. For more detail, see our guide on what to do when a tradie does poor work.
Final Payment and Practical Completion
The final payment is the last instalment under the contract, and it is your last piece of leverage. Do not rush it.
What Practical Completion Means
Practical completion is the point where the work is finished enough to use for its intended purpose. Minor cosmetic items (a paint touch-up, a missing door stop) do not prevent practical completion, but functional issues (a leaking shower, an electrical circuit that trips) do.
Before making final payment, complete this checklist.
- Walk through the entire project with the tradie.
- Create a defects list of anything incomplete or substandard.
- Agree on a timeline for fixing defects (typically 7 to 14 days).
- Obtain all compliance certificates (plumbing, electrical, gas, waterproofing).
- Confirm the building certifier has signed off (for permitted work).
- Collect warranty documentation and maintenance instructions.
Never make the final payment until you have compliance certificates. Certificates for plumbing, electrical, and gas work are legal requirements. If your tradie cannot produce them, the work may not have been done by a licensed tradesperson. Verify licence status on TradieVerify’s search page.
Retention: Holding Back Money for Defects
Retention is a percentage of the contract price withheld as security against defects that appear after completion. It is standard in commercial construction and increasingly common in larger residential projects.
How Retention Works
- Typical amount. 2.5% to 5% of the total contract price.
- When it is held. Deducted from progress payments or the final payment.
- Defects liability period. Held for 3 to 12 months after practical completion. The tradie must fix any defects at no extra cost during this period.
- Release. Once the defects liability period expires and all defects are rectified, the retained funds are released.
When to Use Retention
Retention is most useful on larger projects where defects may not appear immediately. Waterproofing failures, tile cracking, and paint peeling can take weeks or months to show up.
Under $20,000: retention is uncommon. Hold back the final 10% until you are satisfied.
Over $50,000: include a 5% retention clause with a 12-month defects liability period. If your standard contract does not include one, ask a solicitor to add it before signing.
Red Flags: Tradie Payment Terms That Should Worry You
Not all payment requests are legitimate. These are the warning signs that suggest a tradie is either in financial trouble, operating unprofessionally, or attempting to scam you.
Demands for Large Upfront Payments
If a tradie asks for 30%, 40%, or 50% of the contract price as a deposit, that exceeds the legal cap in every Australian state. A tradie requesting this much upfront may need your money to finish someone else’s job. That is a sign of cash flow problems that put your project at risk.
Cash Only, No Receipt
“Cash only” arrangements often indicate the tradie is not declaring income for tax purposes, which means they are unlikely to carry proper insurance or maintain their licence. Always pay by bank transfer so you have a paper trail.
Payment Demanded Before Work Starts
Beyond the agreed deposit, no payment should be requested before work begins. If a tradie asks for materials costs upfront, ask them to include materials in their quote and claim them through progress payments as materials arrive on site.
Pressure to Pay Ahead of Schedule
If your tradie pushes you to pay a progress claim before you have inspected the work, slow down. A financially stable tradie can wait a few days for you to check the work.
No Written Payment Schedule
If the tradie refuses to put tradie payment terms in writing, do not proceed. Every payment, its amount, and its trigger should be documented in the contract. Verbal agreements are almost impossible to enforce. See our guide on getting quotes from tradies.
Requests for Final Payment Before Completion
The final payment should only happen after practical completion and your inspection. A tradie who demands full payment before finishing is removing your only leverage.
Payment Methods: What Is Standard
How you pay matters almost as much as when you pay.
| Method | Protection Level | Notes |
|---|---|---|
| Bank transfer (EFT) | High | Standard for most tradie payments. Automatic record. |
| Credit card | High | Chargeback protection. Some tradies add 1-3% surcharge. |
| PayID/BPAY | High | Automatic bank record. Common for smaller jobs. |
| Cash | Low | Always get a signed receipt. No automatic record. |
Best practice. Pay by bank transfer with a reference (invoice number or stage description) so you can match payments to invoices.
Your Rights Under Australian Consumer Law
The Australian Consumer Law (ACL) protects homeowners regardless of state.
- Due care and skill (ACL s.60). Substandard work gives you grounds to withhold payment or seek a remedy.
- Fit for purpose (ACL s.61). If you specified an outcome and the tradie agreed, the finished work must achieve it.
- Reasonable time (ACL s.62). Unreasonable delays affecting payment milestones can be grounds for contract termination.
Major failure vs minor failure. A major failure (cannot be fixed, or a reasonable consumer would not have agreed to it) lets you reject the work, terminate the contract, and recover payments. For minor failures, the tradie has the right to fix the issue first. See our building dispute guide for full details.
Step-by-Step: Setting Up Payment Terms for Your Project
Follow these steps to establish fair tradie payment terms before any work begins.
- Get the quote in writing. Ensure the quote includes a payment schedule, not just a total price. If it does not, ask for one. See our guide on how to read and compare trade quotes for what to look for.
- Check the deposit against state caps. Use the table above. If the deposit exceeds the legal maximum for your state, raise it with the tradie. Legitimate tradies will adjust without argument.
- Define progress milestones. For jobs over $10,000, agree on at least three milestones tied to completed work. Write the milestone description and payment amount into the contract.
- Include an inspection clause. Add a clause stating you have 5 business days to inspect each completed stage before payment is due. This gives you time to check the work properly.
- Consider retention. For projects over $50,000, include a 5% retention clause with a 12-month defects liability period.
- Specify the payment method. Agree on bank transfer and include the tradie’s account details in the contract.
- Keep every receipt. Store invoices, payment confirmations, and inspection notes in a project folder. You may need them for warranty claims, insurance, or tax deductions.
Frequently Asked Questions
What is the standard deposit for a tradie in Australia?
The standard deposit is 10% of the contract price for most residential work. However, legal maximums vary by state. In Queensland, the cap drops to 5% for contracts over $20,000. In Western Australia, the maximum is 6.5% for home building work between $7,500 and $500,000. In Victoria, the cap is 5% for contracts of $20,000 or more and 10% for contracts under $20,000.
Should I pay a tradie before they start work?
You should only pay the agreed deposit before work starts. Beyond the deposit, all payments should be tied to completed work. Never pay for work that has not been done. If a tradie asks for full payment upfront, find a different tradie. You can search for licensed tradespeople on TradieVerify.
Can a tradie charge me for materials before delivering them?
Material costs should be included in progress payments, not charged separately before delivery. For custom or expensive materials (stone benchtops, custom joinery), include the cost in the next progress payment milestone, triggered when materials arrive on site.
What should I do if a tradie demands payment ahead of the schedule?
Do not pay ahead of the agreed schedule. Refer to your contract and remind the tradie that payment is tied to completed milestones. If they are pressuring you, it may indicate cash flow problems. Document the request in writing. If the situation escalates, contact your state’s building regulator or fair trading body. For state-by-state contacts, see our licence checking guide.
Is retention money standard for residential work?
Retention is common for projects over $50,000 but not standard for smaller residential jobs. Typical retention is 2.5% to 5% of the contract price, held for 3 to 12 months after practical completion. If your contract does not include a retention clause and the project is large enough to warrant one, ask a solicitor to add it before signing.
What happens if I overpay a tradie and they do not finish the job?
If you overpay relative to the work completed and the tradie abandons the project, your recovery options depend on the amount. For disputes under $25,000, you can apply to your state’s civil and administrative tribunal (NCAT in NSW, VCAT in VIC, QCAT in QLD). For larger amounts, you may need legal advice. In Queensland, overpaying beyond the QBCC limits can void your protection under the Queensland Home Warranty Scheme.
Key Takeaways
- Deposit limits are capped by law in most Australian states. The standard is 10%, dropping to 5% for larger contracts in QLD and VIC.
- Progress payments should match completed work. Never let payments run ahead of the tradie’s progress on site.
- Inspect every stage before paying. Your right to withhold payment for defective or incomplete work is your strongest protection.
- Get tradie payment terms in writing. Verbal agreements about payment schedules are unenforceable.
- Hold retention on larger projects. A 5% retention for 12 months gives you security against defects that appear after completion.
- Watch for red flags. Large upfront demands, cash-only requests, and pressure to pay ahead of schedule are warning signs.
Search for licensed tradespeople in your area on TradieVerify and verify their licence before agreeing to any payment terms.
Related Guides
- Getting Quotes from Tradies — Our getting quotes guide
- How to Read and Compare Trade Quotes — Our quote comparison guide
- What to Do When a Tradie Does Poor Work — Our poor work remedies guide
Sources
- Queensland Building and Construction Commission. “Deposits and Progress Payments.” https://www.qbcc.qld.gov.au/home-owner-hub/build-renovate/contracts-payments/deposits-progress-payments
- Consumer Affairs Victoria. “Deposits and Payments for Domestic Building.” https://www.consumer.vic.gov.au/licensing-and-registration/builders-and-tradespeople/running-your-business/deposits-and-payments
- NSW Fair Trading. “Contracts for Residential Building Work.” https://www.fairtrading.nsw.gov.au/housing-and-property/building-and-renovating/preparing-to-build-and-renovate/contracts
- Department of Energy, Mines, Industry Regulation and Safety (WA). “Building Contracts and Progress Payments.” https://www.commerce.wa.gov.au/publications/building-contracts-and-progress-payments
- Housing Industry Association. “Rules on Progress Payments in QLD.” https://hia.com.au/resources-and-advice/managing-your-business/dealing-with-contracts/articles/rules-on-progress-payments-in-qld
- Master Builders Queensland. “Payments and Deductions.” https://www.mbqld.com.au/home-owners/owners-and-renovators/building-a-home/payments-and-deductions
- Australian Competition and Consumer Commission. “Australian Consumer Law.” https://www.accc.gov.au/about-us/australian-consumer-law
- NSW Government. “Retention Money Held by Head Contractors.” https://www.nsw.gov.au/housing-and-construction/compliance-and-regulation/security-of-payment/retention-money