Development contributions are one of the more predictable costs in NSW property development, yet they are frequently missed or underestimated in feasibility studies. Because contributions are typically confirmed in the conditions of development consent, developers who have not budgeted for them can find a significant cost added to a project after the numbers have already been settled.
This month, we look at how Section 94 (Section 7.11) contributions and Section 7.12 levies affect project feasibility, why the estimated cost of works is central to the calculation, and how to establish a reliable contributions allowance before committing to a site or lodging a development application. Requirements vary between councils, so figures and thresholds should always be confirmed for each project.
A quick refresher: Section 94, Section 7.11 and Section 7.12
Section 94 contributions are development levies imposed by NSW councils under the Environmental Planning and Assessment Act 1979 (NSW) to fund the local infrastructure required to support new development. Following amendments to the Act in 2017, Section 94 contributions were renamed Section 7.11 contributions, and the alternative fixed levy under the former Section 94A became the Section 7.12 levy. Both sets of terms remain in common use across councils and planning documents, and the obligations are the same regardless of which term appears.
The two levy types are calculated quite differently, and a council will generally apply one or the other to a given development, depending on its adopted contributions plan.
| Levy type | Basis of calculation | Typical application |
| Section 7.11 (formerly Section 94) | The additional demand the development places on local infrastructure, often assessed per additional dwelling, lot or | Developments that increase demand for local infrastructure, such as subdivisions and residential development in growth areas |
| occupant under the council’s contributions plan | ||
| Section 7.12 (formerly Section 94A) | A fixed percentage of the estimated cost of works, with rates and thresholds set by the council’s plan | Development in areas where the council has adopted a flat-rate levy plan, commonly applied above a minimum cost-of-works threshold |
Which regime applies to a site, and at what rates, is set out in the relevant council’s published contributions plan. This means the likely contribution can generally be researched early, well before a development application is lodged.
Why the estimated cost of works is central to the calculation
Where a Section 7.12 levy applies, the contribution is calculated directly from the estimated cost of works declared with the development application. The declared figure also influences other costs and requirements, including development application fees and whether the levy applies at all, as most plans set a minimum threshold below which no levy is payable.
This makes the accuracy of the estimated cost of works important in both directions. A figure that is too low may attract scrutiny from council, leading to requests for further information, delays or a requirement for independent verification, as many councils require the cost of works to be certified by a registered quantity surveyor above set value thresholds. A figure that is too high means the levy, and other value-based fees, are calculated on costs that will never actually be incurred. An independently measured estimate, prepared from the drawings using current construction rates, avoids both outcomes.
Why contributions belong in the feasibility
On smaller projects, contributions are sometimes treated as a minor allowance within general council fees. As project scale increases, this approach becomes riskier, because contributions scale with the size and value of the development while the allowance often does not.
Under a percentage-based Section 7.12 levy, the contribution on a larger project can run to tens of thousands of dollars. Under a Section 7.11 plan, contributions in some growth-area councils are assessed per additional lot or dwelling and can be substantial, particularly for greenfield sites where new infrastructure must be provided. The difference between greenfield and infill sites is one of the larger variables in the contributions system and can meaningfully affect whether a site stacks up.
Timing is the other consideration. Contributions are generally payable before a construction certificate is issued, which is often a point in the project where cashflow is already stretched, after land settlement and before construction funding is fully drawn. An unbudgeted contribution at this stage can affect both the project’s margin and its program. Lenders are aware of this, and construction finance assessments will typically consider whether statutory costs such as contributions have been properly allowed for.
How to establish a reliable contributions allowance
Review the council’s contributions plan early
Every NSW council publishes its contributions plans. Before committing to a site, or at the latest before design work begins, the applicable plan should be identified along with its current rates, thresholds and any exemptions. This establishes whether the project falls under a Section 7.11 plan, a Section 7.12 levy or another arrangement, and provides the basis for a realistic allowance in the feasibility.
Establish an accurate estimated cost of works
Because the estimated cost of works drives the Section 7.12 calculation and several related fees, it should be established through proper measurement rather than a broad rate per square metre or an informal builder figure. A quantity surveyor measures the proposed works from the available drawings and applies current market rates, producing a documented estimate that will withstand council review. For higher-value projects, most councils require the figure to be certified by a registered quantity surveyor in any case.
Carry the figures into the feasibility and the DA
With the contributions plan identified and the cost of works properly established, the expected contribution becomes a calculated line item in the feasibility rather than a general allowance.
Lodging a compliant cost report with the development application also supports a smoother assessment, as council officers are not left to form their own view on whether the declared cost of works is plausible.
This is general information and not legal or financial advice. Contribution rates, thresholds and reporting requirements vary between councils and are subject to change. Developers should always confirm current requirements with the relevant local authority.
Need a Section 94 cost summary report or registered quantity surveyor cost report for your DA? Section 94 can help.
Frequently asked questions / People Also Ask
When are Section 94 contributions payable?
Contributions are typically required to be paid before a construction certificate is issued, although the timing is set out in the conditions of development consent and can vary. Some councils offer deferred or staged payment arrangements in certain circumstances, which should be confirmed directly with the relevant council.
Do all developments pay development contributions?
No. Whether contributions apply depends on the council’s adopted contributions plan, the type and scale of the development, and any applicable thresholds or exemptions. Many Section 7.12 plans, for example, only apply above a minimum estimated cost of works. The relevant plan should be reviewed for each project.
Can contributions be estimated before lodging a DA?
Yes. Council contributions plans are public documents, and once the likely cost of works or development yield is known, the expected contribution can generally be calculated in advance. This allows the figure to be included in the feasibility before the site is committed to or the application is lodged.
What happens if the estimated cost of works is understated?
An understated cost of works can lead to council queries, requests for independent verification and delays to the assessment of the application. It can also produce inconsistencies across the documentation package. An independently prepared estimate reduces these risks by providing a defensible, properly measured figure from the outset.
Who prepares the estimated cost of works for a DA?
For lower-value projects, some councils accept a cost summary prepared by the applicant or designer. Above council-specific value thresholds, a report prepared by a registered quantity surveyor is generally required. A quantity surveyor can also prepare the estimate earlier, at feasibility stage, so the same figures carry through to the application.