A back-charge markup needs its own calculation and contractual basis
Separate an added administration or overhead markup from the underlying back-charge expense and check its calculation and claimed basis.
Corporate Recovery Partners
01 / 06
The deduction is larger than the supporting invoice
The builder provides a third-party invoice to explain a deduction from your payment, but the deduction is higher. It says the difference is an administration or overhead percentage. Ask for that component to be identified separately. Evidence that a base expense exists does not, by itself, explain an additional percentage or establish your responsibility for either amount.
List the underlying items, the base used for the percentage, the rate and the resulting amount. Check whether the percentage applies once or appears again inside another line. Keep any tax-basis question for the accountant to clarify. Do not assume a round percentage is an agreed contract term merely because it appears on the builder's standard spreadsheet.
Business.gov.au's contract guidance recommends clear fees, responsibilities and payment arrangements. Ask which actual provision the builder relies on for the additional amount and provide the contract to your adviser. This article does not decide whether a markup is recoverable. Its purpose is to distinguish the supporting cost, the added calculation and the legal basis being asserted.
Imagine the supplied invoice is $4,000 and the builder's schedule adds a separate ten per cent amount. Confirm what that percentage is calculated on and whether other items are included in the base. Then ask the adviser to assess the supporting clause and circumstances. Correct arithmetic would not settle the separate question of whether the charge belongs in your account.
Keep underlying responsibility open where disputed
You may dispute the original expense as well as the added amount. Record those positions separately and preserve the relevant site evidence and notices. Avoid accepting the base expense inadvertently while asking only about the percentage. Equally, do not let a valid query about the markup become an unsupported denial of work you know was properly attributable to you.
Respond through the advised process using a reconciliation of base cost, added percentage and disputed balance. Check any applicable response deadlines independently. The builder should be able to explain each component, and your adviser should be able to assess it without reverse-engineering a single net deduction whose extra charges remain hidden.
