Working With Contractors: Licences, ABNs, Insurance, and Work Orders

Why Vetting Contractors Matters

Engaging the wrong contractor — unlicensed, uninsured, untracked — exposes the corporation and every owner in the group to serious legal and financial risk. If something goes wrong on site, an uninsured contractor can leave the corporation defending a claim it never expected to face. The good news is that proper vetting takes very little time once you know what to ask for.

Licences

It's essential that any tradesperson your group engages is both properly licensed and insured for the work they're doing. Using an unlicensed person to do work that requires a licence isn't only illegal — it can void the corporation's insurance and expose the committee to personal liability.

Examples of work that requires a licensed contractor in South Australia include:

• Building work
• Plumbing
• Electrical work
• Gas works
• Asbestos removal — see our guide to asbestos management

You can verify a contractor's licence and the scope of work they're authorised to undertake at the SA Government's Consumer and Business Services portal: cbs.sa.gov.au/find-a-licence-holder.

ABN and PAYG Withholding

Every contractor your corporation engages should quote a current Australian Business Number (ABN). An ABN is the unique identifier the Australian Tax Office allocates to businesses, and it's how the corporation knows it's dealing with a registered business entity rather than a casual operator.

Important: if a contractor doesn't quote an ABN on their invoice, the corporation is required by law to withhold 47% of the payment under PAYG rules and remit it to the ATO. This is the prescribed withholding rate at the top marginal tax rate plus the Medicare levy. The contractor can claim the withheld amount back at tax time, but it makes life difficult for everyone — much easier to insist on an ABN before engaging.

You can check whether a contractor's ABN is current at the Australian Business Register: abr.business.gov.au.

Insurance

We strongly recommend that every contractor produce evidence of current insurance before they start work. The two policies that matter most are:

• Public liability insurance — covers third-party injury or property damage caused by the contractor's work. Standard cover is $10 million or more.
• Workers compensation — required if the contractor employs anyone (including subcontractors). Even sole traders should carry personal accident cover.

An uninsured contractor leaves the corporation exposed if the contractor injures themselves on site, injures someone else, or damages property in the course of the work. Ask for a current certificate of currency — not last year's one — and keep a copy on file.

Vetting Process

The most efficient way to handle vetting is to designate one officer on the committee to handle it for the whole group. That officer maintains a short list of pre-vetted contractors — licence checked, ABN confirmed, insurance certificate on file — and quotes are only sought from contractors on that list.

This avoids the situation where every job requires fresh vetting, and it makes the corporation a more attractive client to good contractors who appreciate not having to re-prove themselves every time.

Calling for Quotes — A Checklist

• Has the committee finalised the scope of work?
• For major jobs (painting, structural repairs, roof work), has a professional specification been obtained? See our painting guide for an example.
• Has a short list of pre-vetted contractors been selected?
• Do they all hold the correct licence, ABN, and insurance?
• Has a written request gone to each contractor including: details of the work, a plan of the group, and the corporation's contact person and phone number?

Issuing a Work Order

Once a contractor is selected, the corporation should issue a formal written work order confirming the engagement. The work order should:

• Set out the scope and any agreed conditions
• Confirm the price and any progress payment schedule
• Confirm the agreed start date
• Attach the winning quote and any supporting specifications

A handshake or a phone call isn't enough. If something goes wrong later, the work order is the document everyone refers back to.

Get in Touch

If your corporation needs help vetting contractors or setting up a quote-and-work-order process, we're happy to help. Acacia Collective maintains its own list of trusted operators across South Australia for most maintenance categories.

Call us on 1300 792 255 or email hello@acaciacollective.com.au.