Security of Payment Act Tasmania (TAS): What Contractors Need to Know

Understand your rights and obligations under NSW's Security of Payment laws to get paid on time and protect your cash flow.

Delayed payments put subcontractors at financial risk and stall project delivery.

The Building and Construction Industry Security of Payment Act 2009 (Tas) gives contractors a clear and enforceable path to recover unpaid amounts, without needing to escalate to court. 

It establishes a statutory right to progress payments, even where the contract is silent, and sets out a streamlined process for claims, payment schedules, and adjudication.

Key Rights Under the Security of Payment Act Tasmania

Tasmania’s Security of Payment Act (SOPA) provides a set of core rights that apply to all payment claims made under its terms, including:

• Progress payments: Contractors are entitled to regular progress payments for construction work or related goods and services, regardless of contract terms
• Payment claims: Claims can include retention amounts and must be made within the later of either the contract timeframe or 12 months from when the work was last done or goods supplied
• Payment schedules: Respondents must provide a payment schedule when they receive a payment claim
• Adjudication: If payment is delayed or disputed, the claimant can initiate adjudication, a fast, independent process that avoids drawn-out legal action
• Debt recovery: Adjudicated or scheduled amounts not paid on time can be enforced as a court judgment
• Automatic liability: If the respondent fails to issue a payment schedule on time, the full claimed amount becomes due
• Right to suspend work: Contractors may suspend work if unpaid, with legal protection from liability for delays
• Interest on overdue payments: Late payments accrue interest at the higher of the contract rate or the Supreme Court rate
• Ban on “pay when paid” clauses: Contract terms making payment conditional on upstream payment are unenforceable

Who Can Make a Claim?

Any party carrying out construction work or supplying related goods and services under a contract in Tasmania can make a payment claim under the Security of Payment Act.

Eligible claimants include:

• Head contractors: Claiming against the project owner or principal
• Subcontractors: Claiming against head contractors
• Suppliers and consultants: Providing construction-related goods or professional services

To be eligible, a party must be entitled to a progress payment and submit a valid claim in line with the Act’s requirements.

What Work can be Claimed?

Under the SOPA, contractors, subcontractors, and suppliers in Tasmania can claim progress payments for a wide range of construction work and related services carried out under a contract.

Claimable work includes:

Certain work types and contract arrangements fall outside the scope of the Act:

• Resource extraction: Drilling or extracting oil, gas, or minerals
• Employment contracts: Work performed under a direct employment relationship
• Financial agreements: Contracts that involve lending, guarantees, or insurance arrangements
• Non-measurable payment terms: Agreements where payment isn’t based on the value of work or goods supplied
• Work outside Tasmania: Construction work physically performed outside the state, unless only goods or services were supplied from within Tasmania, and no claim has been made under another jurisdiction

Timeframe and Deadlines

The SOPA  sets out strict, non-negotiable timeframes for claims, responses, and adjudication. Missing a deadline can result in losing access to adjudication or becoming automatically liable for the full claimed amount.

Payment Due Dates

If the contract specifies a due date, payment must be made by that date. If not, the due date depends on the type of contract and who the respondent is:

• 10 business days: For most commercial or professional arrangements
• 20 business days: If the claim relates to a residential structure and the respondent is a landowner who is not a building practitioner

Serving a Payment Claim

Payment claims can be served on or after the reference date stated in the contract, or, by default, the last day of the month in which work was done or goods/services were supplied.

Claims must be made within the period specified in the contract or within 12 months of the last work or supply, whichever is later.

Only one claim can be served per reference date, but previously claimed amounts may be included again.

Responding with a Payment Schedule

If the respondent intends to pay less than the claimed amount, they must serve a payment schedule within the earlier of:

• The timeframe stated in the contract, or
• The applicable day under the Act (10 business days for most contracts, 20 business days for certain residential projects involving non-practitioner landowners)

If no schedule is provided on time, the full claimed amount becomes payable.

After adjudication

Unless the determination specifies another date, the adjudicated amount must be paid within 5 business days of the decision being served.

The Payment Claim Process

The Security of Payment Act 2009 (Tas) outlines a structured process for claiming and recovering progress payments. Each step must be followed precisely. Missing a requirement may result in losing access to adjudication or legal enforcement.

1. Prepare the Payment Claim

   A valid payment claim in Tasmania must:
   
   Be in writing and addressed to the respondent
   Include the claimant’s name
   Identify the construction work or related goods/services in sufficient detail
   State the claimed amount, including any retention or suspension costs if applicable
   Clearly state that it is made under the Building and Construction Industry Security of Payment Act 2009 (Tas)
   
   The inclusion of this reference is mandatory. Claims that do not clearly indicate they are made under the Act may be deemed invalid.

2. Serve the Payment Claim

   The claim must be served on or after the reference date set in the contract, or on the last day of the month, by default. It can be delivered in person, by post, or electronically (if agreed).
   
   Claims must be served within the contract-defined period, or 12 months after the last work or supply, whichever is later.
   
   Only one claim may be served per reference date, but past unpaid amounts may be included again.

3. Respondents issues a Payment Schedule

   If the respondent intends to pay less than the claimed amount, they must serve a payment schedule that:
   
   Refers to the relevant claim
   States the scheduled amount
   Explains any withheld amounts and the reasons why
   
   The schedule must be served within the earlier of the contract timeframe or 10 business days after receiving the claim (or 20 business days for certain residential contracts involving non-practitioner landowners).
   
   If no schedule is served by the deadline, the respondent becomes liable for the full claimed amount.

4. Respondent Pays or Claimant Takes Action

   If a valid schedule is issued and payment is not made, the claimant may:
   
   Recover the amount as a debt in court
   Apply for adjudication
   Suspend work after giving 2 business days’ notice under the Act
   
   If no payment schedule is issued and the claim remains unpaid:
   
   - The claimant must notify the respondent of their intent to adjudicate within 20 business days of the due date
   - The respondent then has 5 business days to provide a late payment schedule
   - If no schedule is provided, the claimant must apply for adjudication within 10 business days of the 5-day period ending
   

5. Adjudication (if required)

   Adjudication provides a fast, binding resolution. The adjudicator will:
   
   Review the payment claim, schedule (if applicable), and supporting material
   Issue a written determination specifying the payable amount and due date
   Deliver the decision within 10 business days, unless both parties agree to a longer timeframe
   
   Only reasons raised in the payment schedule can be used in the adjudication response. Adjudicators must be qualified, impartial, and appointed by an authorised nominating authority.

6. Payment or Enforcement

   The respondent must pay on the date set in the adjudicator’s determination, or within 5 business days of receiving the determination, if no date is specified.
   
   If payment is not made, the claimant may:
   
   Request an adjudication certificate
   File it with the court as a judgment debt
   Suspend work under the Act after giving 2 business days’ notice
   
   Respondents cannot introduce new defenses in court. The adjudicator’s decision is binding and can only be challenged in rare cases involving jurisdictional error.

Adjudication

Adjudication offers a fast, legally binding way to resolve payment disputes—without going to court. It’s a core mechanism of the Security of Payment Act 2009 (Tas), giving claimants a clear path to enforce entitlements when informal efforts fail.

A claimant may apply for adjudication if:

• The payment schedule proposes to pay less than the claimed amount
• The respondent fails to pay the full scheduled amount by the due date
• No payment schedule is served, and the claimed amount is unpaid, provided the claimant first gives formal notice of intent and follows the required timeframes

Although adjudication is a powerful tool, many subcontractors see it as a last resort. Concerns about damaging relationships with head contractors often deter action. Still, where payment disputes persist, adjudication delivers a structured, enforceable path forward.

Tasmania’s Security of Payment Act gives contractors a clear, enforceable pathway to secure payment.

The Act outlines firm rights, timeframes, and enforcement steps to help contractors and suppliers manage payment claims with confidence. It’s a practical tool for reducing disputes and maintaining project momentum.

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