GST, Deposits and Progress Payments: Paying Auckland Contractors

Last reviewed: July 2026 · How we research these costs · Consumer guidance: Consumer NZ

A mate in Albany rang me last winter, half-panicked, because his landscaper had asked for a 50% deposit on a $28,000 job before a single sod was turned. Was that normal? Was he about to get burned? The honest answer is “it depends”, and the difference between a fair payment schedule and a warning sign comes down to a few things worth understanding before you sign anything.

My name’s Grant Pearce, and I’ve spent the last 15 years managing renovation and landscaping jobs right across Auckland — decks in Albany, kitchen strip-outs in Mt Eden, retaining walls in Devonport — so I’ve seen just about every payment structure a contractor can put in front of a homeowner, the fair ones and the dodgy ones alike. Here’s how paying an Auckland contractor actually works, from GST to the final invoice.

GST: why the number on the quote isn’t the number you pay

New Zealand’s GST is 15%, and any contractor turning over more than $60,000 a year must be registered for it — which is basically everyone doing renovation work. The trap is quotes that quietly leave GST off to look cheaper. A “$20,000” quote plus GST is really $23,000, and that’s a $3,000 surprise you don’t want landing at the end of a job.

GST fact	What it means for you
Standard rate	15%
Registration threshold	$60,000 annual turnover
Quoted “$20,000 + GST”	Actual total = $23,000

• Always ask “is that GST inclusive?” and get the answer written on the quote itself.
• Check for a GST number on invoices — a registered tradie will have one, and you’ll need it if you’re claiming anything back.
• Compare quotes on the same basis: a GST-inclusive quote and a GST-exclusive quote aren’t actually comparable until you’ve added the 15% to the second one.

One more thing on GST: it applies to the whole job, not just the final bill, so a deposit and every progress claim should each carry their share of the 15% — the total across all of them shouldn’t creep past the GST-inclusive figure you agreed. When I hand a client a quote, I write that inclusive number in bold at the bottom so there’s no argument later about what the job actually costs.

Deposits: what’s fair, and what’s a red flag

A deposit itself isn’t the problem — contractors order materials, book crews and turn away other work off the back of your job, so asking for money up front is reasonable. The question is how much.

Deposit size	How I’d read it
10–15% of contract value	Fair — covers the first materials order and secures the booking
40–50%+, no breakdown	Red flag — a lot of your money sitting with someone you haven’t seen perform yet

The genuine exception is custom materials. If your job needs a specific batch of tiles, imported stone or a made-to-order joinery run, the contractor may legitimately need most of that cost up front because the supplier wants paying before it ships. Ask them to itemise it: “$8,000 of the deposit is the stone order” is reasonable; “$14,000 deposit, no breakdown” is not.

The other thing I’d watch is when the deposit falls due. Asking for it on signing, once you’ve both agreed a written scope and schedule, is normal. Being pushed to pay a big deposit on the spot — before anything’s in writing, before you’ve had a chance to check the contractor out or get a second quote — is the kind of pressure I’d treat as a warning in its own right. A genuine tradie who’s properly busy isn’t going to lose your job over the day or two it takes you to read the contract properly.

Progress payments: pay for work you can actually see

On any job past a few thousand dollars, you want to pay in stages tied to visible milestones, not to the calendar. The principle is simple: money follows completed work, so you’re never far ahead of what’s actually been built. A typical schedule on a $40,000 concrete and landscaping job in Albany might look like this:

Stage	Typical payment
Deposit on signing	10–15%, to secure the booking and first materials
Site prep / excavation done	A further progress claim once the groundwork is visible
Pour / build complete	The bulk of the contract, once the main work is in the ground
Final completion	Balance, holding back 5–10% until snags are fixed and signed off

The exact percentages matter less than the principle: at every stage, the money you’ve handed over should be roughly in line with the work that’s actually gone in. If you’re ever a long way ahead — paying for a pour that hasn’t happened, or materials still sitting at the supplier’s yard — that’s worth a conversation before the next payment leaves your account. I’d also tie every progress claim to a milestone you can walk out and put your hand on, so “done” means done, not “nearly there”. A schedule written in stages rather than dates does that automatically: if the excavation slips a week because of Auckland rain, the payment slips with it, which is exactly how it should work.

Why I always hold back the last 5–10%

That final retention is your leverage. Once a contractor’s been paid in full, the motivation to come back and fix a cracked edge or a sticking gate has a habit of evaporating. Keeping a genuine sum owing until you’re satisfied is, in my experience, the single most useful habit in this whole game — it costs the contractor nothing if the work’s actually finished, and it saves you a fight if it isn’t.

I always agree the holdback up front and write it into the schedule, so it’s never a shock at the end. Ten per cent of a $40,000 job is $4,000 — enough to matter, not so much that a fair contractor feels short-changed while they clear the last few snags. Once the punch-list is done and I’m genuinely happy, I release it promptly, because sitting on someone’s money longer than you need to is just as unfair the other way. A retention is meant to be a safety net, not a stick.

What a proper invoice should show you

Every payment you make should come with an invoice you can file, not just a number texted to you. On my own jobs I make sure each invoice shows the business name and GST number, the date, a plain description of the stage being charged, the amount, and how much of that total is GST. If you’re ever asked to pay into a bank account with no invoice at all, stop and ask for one — that paperwork is what ties your money to the work, and it’s what you’ll lean on if a job ever turns into a dispute.

Keeping that trail also makes the whole job easier to follow. When each progress claim lines up with a stage in the schedule and a matching invoice, you can see at a glance that you’re paying for work that’s actually been done, and you’ve got a clean record of what was agreed and what was paid if you ever need it.

Contracts over $30,000: what the law actually requires

For any job over $30,000 including GST, the law requires a written contract with specific disclosure information, plus a 5-working-day cancellation right after signing. This isn’t optional or old-fashioned — it exists because too many homeowners got stung by handshake deals. The requirements are laid out plainly on the government’s Building Performance site, and any competent builder or contractor will already work this way. If someone resists putting a payment schedule in writing, that tells you what you need to know. For the wider picture on pricing before you even get to payment terms, our guide on how to get accurate quotes from Auckland tradies pairs well with this one.

Below that $30,000 line the same habits still pay off. Even on a $12,000 deck I’d want the scope, the price, the GST position and the payment stages written down and signed by both of us. It protects the homeowner, but it protects me too — there’s no arguing later about what was included when it’s all there in black and white. Rules do get updated from time to time, so treat what I’ve set out here as a starting point rather than the last word, and confirm the current requirements for your own job before you sign.

Cash discounts and other shortcuts I’d steer clear of

Pay by bank transfer or card, not cash, so there’s a record and a GST invoice tied to every payment. Match each payment to a stage you can see and touch. And if a tradie offers a “cash, no GST” discount, understand what you’re trading away: you lose all your paper protection and become party to their tax problem. A few hundred dollars saved isn’t worth having no leg to stand on when a $30,000 job goes wrong.

There’s a bigger picture here too. When a job goes well, none of this feels like it matters much. It’s the one job in twenty that goes sideways — a contractor who goes quiet, a stage done badly, a disagreement over what was included — where the paper trail earns its keep. Paying cleanly, in stages, against invoices you’ve kept is cheap insurance against exactly the situation you hope you’ll never be in.

Questions Auckland homeowners ask me about paying contractors

What’s a normal deposit for a renovation or landscaping job in Auckland? Around 10% to 15% of the contract value, or enough to cover the first materials order, is fair. Larger deposits can be legitimate when custom or imported materials must be paid for up front, but ask for that portion to be itemised. Be wary of anyone wanting 40–50% before work starts with no breakdown.

My contractor wants 50% upfront — should I push back or walk away? Push back first. Ask exactly what the deposit covers and whether any of it is tied to a specific materials order you can see quoted separately. If they can itemise it, it may well be genuine; if they can’t or won’t, that’s your answer — and it’s worth getting a second quote before you hand over $14,000 or more on trust alone.

Do I need a written contract for renovation work? For any residential building job over $30,000 including GST, a written contract with prescribed disclosure information is legally required, and you get a 5-working-day cancellation right after signing. Even below that threshold, get the price, scope and payment schedule in writing — a contractor who won’t put terms on paper is a risk you don’t need.

Why would a contractor ask for a bigger deposit just to cover materials? Suppliers of imported stone, custom tiles or made-to-order joinery often want payment before they’ll place the order, so the contractor has to pass that cost on to you upfront. It’s legitimate — but it should be itemised against the actual materials order, not folded into a vague lump sum.

How much should I hold back until the job’s finished and signed off? I keep the final 5–10% of the contract owing until every snag on my list is fixed and I’m genuinely happy with the work. That retention costs a fair contractor nothing, because they finish the job and get paid in full, but it gives you real leverage if something needs putting right. Agree the holdback in writing at the start, alongside the rest of the payment schedule, so it isn’t a surprise at the end.