Mates rates short-circuits couple’s $25k HomeBuilder cash: tribunal rules

A Queensland tribunal ruling shows using family or “mates rates” for free work can kill a HomeBuilder grant if it reduces the official building contract value.

A young couple has lost a $25,000 HomeBuilder grant after a tribunal appeal division ruled unpaid electrical work by a relative breached eligibility rules, a clear warning against those using ‘mates rates’ and cashing in on government housing incentives. Pictures: File

A Queensland couple has lost a $25,000 HomeBuilder grant after a tribunal ruled unpaid electrical work by a relative breached eligibility rules, a clear warning against those using “mates rates” and cashing in on government housing incentives.

In a decision delivered this month, the Queensland Civil and Administrative Tribunal Appeal Division overturned an earlier ruling and confirmed the Commissioner of State Revenue’s decision to reject Michael and Shannon Reynolds’ application for the grant.

The dispute centred on work done by Mr Reynolds’ father, Peter Reynolds, who handled all the electrical work for free, saving the couple about $17,000 to $20,000 but leaving their contract short of the “comprehensive home building contract” requirement.

The tribunal accepted that the electrical work was done at no cost to either the builder or the owners, meaning the overall contract price was reduced and part of the required building work fell outside the builder’s legal responsibility.

Senior Member Professor Ned Aughterson found that the arrangement meant the work fell outside the scope of the signed building contract, which under the grant’s conditions must cover all work from start to finish.

The tribunal appeal division made clear that allowing unpaid or off-contract work by family or friends could undermine the entire intent of the grant scheme. Picture: File

“The question is whether the contract was a comprehensive home building contract in the sense that a builder contracted to do all of the work, ‘from the start of the building work to the point where the home is ready for occupation’,” he said.

“It is evident that the contract as between the respondents and the builder did not include the electrical work, so that it was not a ‘comprehensive’ home building contract,” Senior Member Aughterson said.

Evidence showed the Reynolds family purchased the electrical materials themselves and were reimbursed by the builder for costs that were included in the bank loan.

Peter Reynolds held a licence only as an electrical fitter mechanic, not as an electrical contractor.

Under Queensland law, a person cannot legally do electrical work as a subcontractor for a builder without an appropriate contractor’s licence.

Peter Reynolds told the tribunal appeal division he did the work as a favour for his son.

Senior Member Aughterson said it was clear Peter Reynolds did not have a formal contract with the builder but did the work on his own as a favour for his son.

The tribunal made clear that allowing unpaid or off-contract work by family or friends could undermine the entire intent of the grant scheme.

“A ‘comprehensive’ home building contract cannot be intended to refer to a contract that incorporates the bulk of the work but excludes part of the work,” the tribunal said.

It found that if work is done outside the official contract, it risks breaching the $750,000 transaction cap, which must include all costs.

The appeal by the Commissioner of State Revenue was allowed, the couple’s grant entitlement was cancelled, and an earlier decision in their favour overturned.