Retiring from building in Victoria key steps and considerations

Retirement can be an exciting time. However, it involves more than just stepping away from your business. Key considerations include deregistering your company and surrendering your registration, managing completed building projects, potential defect claims on completed work, and Domestic Building Insurance (DBI) obligations.

The steps you need to take will depend on several factors. These include your business structure, whether the business will continue under new ownership (e.g. sold or handed over), or whether it will be closed entirely. It is also important to consider that deciding to retire does not mean that you are removed from your obligations to existing clients.

This resource outlines the key considerations to help you retire with confidence.

Registrations

Maintaining registrations

There is no strict legal requirement to maintain your registration upon retirement. However, some retiring builders may choose to retain their practitioner registration, ABN, and/or company registration for up to six years following completion of their last building project. Maintaining registration during this period ensures you remain contactable in the event of defect rectification requests or a notification of a statutory breach within the maximum DBI limitation period. This allows you to engage in rectification works, or subcontract if required.

Surrendering your practitioner registration

Registered building practitioners who operate under their individual name (e.g. John Smith) may surrender their individual registration to the Building and Plumbing Commission (BPC) when retiring from the industry. However, if you also operate under a company (e.g. HIA Builders Pty Ltd) and wish to retire the business itself, you must also surrender the company registration. If you are retiring personally but the company will continue to operate under other registered building practitioners, only the individual registration needs to be surrendered.

The ‘Surrender of Building Practitioner Registration’ forms for natural persons and companies, and the application requirements are available on the BPC.

It is important to note that once surrendered, you will not be able to complete any domestic building work that exceeds $10,000 in value (unless a single trade exemption applies).Surrendering your registration may therefore prevent you from carrying out any rectification or remedial work that arises during the statutory warranty period.

Before surrendering your registration, it is important to consider if there is any potential or future need to possibly retain your practitioner’s registration. If you have a future need to regain your registration it is important to be aware you may be assessed under the current BPC requirements. These could be substantially different to the requirements when your original registration was granted (i.e. there may be a need to do further training to obtain a new licence - particularly for those builders who were first licensed many years ago).

Document retention

In any case, retiring builders should ensure their contact details remain current with relevant authorities and, where possible, with former clients (including phone number and email) for at least six years following completion of their final project. All project-related documentation, including contracts, permits, and insurance policies should also be retained to facilitate any future enquiries or claims. As the statutory warranty period for domestic building work in Victoria is 10 years, it is advisable to retain all relevant documents within this period.

Insurance 

Do I need to maintain public liability and contract works insurance?

HIA contracts require domestic builders to hold public liability, and contract works insurance (or ‘construction works’ insurance) during active building projects. However, retirees who are no longer licensed and will not enter into any new building contracts are not required to maintain or take out new public liability or contract works insurance. 

There is no obligation for builders to retain these insurances after completion and handover. In fact, some insurance policies may expire on completion of each project, or may involve a turnover policy, insuring all building works by a builder for a specified timeframe. For specific policy information, contact your insurer or HIA Insurance Services.

Professional indemnity insurance

Professional indemnity insurance is an optional form of cover that can protect builders and other building professionals who provide advice or services, in the event an owner makes a claim of negligence, error, or breach of duty. While not mandatory, it can be a valuable safeguard, particularly for those nearing retirement.

Claims can still arise years after a project is completed, which is why policies can include run-off cover. This type of cover extends protection beyond the life of a business, ensuring that a retired builder is still insured against claims relating to their past work, subject to the terms and conditions of the specific insurance policy. This cover is not mandatory, but many builders elect to purchase runoff public indemnity insurance upon retirement to manage the risk of postretirement claims Learn more about professional indemnity insurance.

Domestic Building Insurance (DBI)

DBI indemnifies homeowners for defective building works or a statutory breach where the builder cannot meet their obligations due to death, insolvency, disappearance, or failure to comply with a final VCAT or court order. The primary provider of DBI is the BPC. Learn more about DBI and the regulatory changes.

Claims must be made within six years of completion for structural defects, and within two years for non-structural defects identified within that period.

“Disappearance" as a trigger for DBI is generally understood to be a situation where the builder cannot be found after due search and enquiry. While retirement alone does not necessarily constitute "disappearance," the BPC may, in its discretion, accept a DBI claim from a homeowner if the builder cannot be reasonably contacted or found. As mentioned, it is prudent to remain contactable during the DBI period. In such cases, the BPC may make a payment to the homeowner (up to a maximum of $300,000) and seek recovery from the builder, even if the builder is retired.

Change of company director

In the case of a company that intends to continue to operate and replace the retiring Director, both the BPC and ASIC requirements should be considered.

A registered building company must notify the BPC if they intend to add or remove a director in the event of an individual retiring, but the company is continuing to operate. The company must retain at least one nominee director registered in the relevant class. If the retiring director is the sole nominee, a replacement must be appointed within 30 days to avoid suspension. The company must also maintain its registration, pay annual fees, complete insurance checks, and ensure ongoing compliance with the relevant class of work. Learn more about the BPC’s change of director process.  

Retiring directors can apply to the Australian Securities and Investments Commission (ASIC) to be removed from the company register. If the retiring director is the sole director, generally, a replacement must be appointed before or at retirement. Officeholder details must be updated via ASIC’s online services. 

Directors should ensure all legal, financial, and insurance obligations are properly handed over to successors. Learn more about ASIC’s change of director process.

Closure of a company

In the case of a company closure, voluntary deregistration of a company is a process available to eligible businesses that have ceased trading and wish to officially close down their operations. This process is conducted through ASIC.

Before applying for voluntary deregistration, a company generally needs to meet several conditions, including (but not limited to):

• Not conducting any business;
• Having assets valued at less than $1,000;
• Having no outstanding liabilities, such as unpaid employee entitlements;
• Not being involved in any ongoing legal proceedings; and
• Having paid all fees and penalties owing to ASIC.

Additionally, all members of the company must agree to the deregistration, and clear any pending obligations, including tax, superannuation, and other regulatory requirements.

The voluntary company deregistration process is managed by ASIC. Before lodging your application, ASIC may require:

• All company bank accounts be closed;
• All company records and assets be dealt with (including transferring or selling vehicles, intellectual property, land, and trademarks);
• Any company property that remains in the company's name transferred or cancelled, including business names and licenses; and
• If the company was a trustee, a new trustee is appointed, and no trust property remains in the company’s name.

It’s important to understand that generally, when a company is deregistered, it no longer exists by law. This means it typically cannot trade, sign contracts, or carry out business.

Australian Business Number (ABN)

Both sole traders and companies who wish to retire and close their business can cancel their ABN. Before cancelling your ABN, you may be required to fulfill outstanding lodgement, reporting, and payment obligations with government agencies (i.e. the Australian Taxation Office) you have dealt with. This could include:

• lodging final activity statements or PAYG withholding reports;
• repaying any GST credit refunds;
• paying any outstanding tax debts; and
• notifying the ATO of cessation of business.

If applicable, PAYG withholding should usually be cancelled before the ABN.

You may cancel your ABN in several ways, including:

• Online via the Australian Business Register website; or
• Through your registered accountant.

Engaging professional advice

Business closure or transition can be a complex process. It is recommended to obtain professional advice from a registered accountant or financial advisor for tax and financial planning matters. Where a trust structure is involved, legal advice should be sought to ensure compliance with all legal obligations.

To find out more, contact HIA's Contracts and Compliance team

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