Airports (Major Airport Developments) Determination 2021

The instrument revolves around a small number of tightly defined concepts that determine what may be counted as the cost of construction under the Airports Act. Several definitions are expressed directly in the instrument; others are noted as being defined in the Act (s 4).

Key defined terms in the instrument:

• Act means the Airports Act 1996 (s 4).
• base building fit-out is defined as all fixtures, fittings and finishings that are not tenant fit-out (s 4). The instrument therefore creates a residual category, with the contrasting category "tenant fit-out" defined separately.
• tenant fit-out is defined by reference to three alternative criteria: fixtures, fittings and finishings that are (a) provided according to the specifications of a tenant under a lease; (b) are or become the property of a tenant under a lease; or (c) a tenant has a right or duty to remove under a lease (s 4). The definitions are lease-rights centred: a cost is tenant fit-out if lease documents give the tenant specification, ownership or removal rights or duties.
• base services is a listed, non-exhaustive concept: electricity, gas, telecommunications, water, sewerage, mechanical, fire protection and other like services (s 4). The phrase "other like services" signals a category of building services intended to be included by analogy.
• earthworks is defined as excavating, embanking, levelling, filling, tunnelling and drilling (s 4).
• site establishment is defined by example: constructing or installing buildings, structures, amenities or equipment at a construction site for use during construction, for example site offices and toilet facilities (s 4).
• trunk infrastructure is explicitly defined to include gas mains, electricity substations and infrastructure for water, sewerage and telecommunications delivery that is designed to be shared to a significant degree with other developments (s 4). The definition embeds a sharing/design characteristic as the criterion for "trunk."
• GST is given the statutory meaning in s 195-1 of the A New Tax System (Goods and Services Tax) Act 1999; the instrument thus depends on federal tax law for that term (s 4).

The instrument then defines the narrower phrase "costs associated with an activity or thing" for use in ss 6-7: it comprises all material, equipment, labour and freight costs, and all taxes excluding GST (s 5). That definition functions as the unit of account for costs that are otherwise included or excluded. It is not a general accounting definition, but a statutory one confined to the instrument's operation.

On a conceptual level the instrument operates by positive and negative lists. Section 6 presents a positive list: items that, when incurred in connection with a development, count as cost of construction for the Act. Section 7 presents a negative list: items that do not count. The instrument also contains a consistency rule: an item listed in section 7 does not become included by virtue of section 6 (s 6, final paragraph).

Finally, the instrument signals a link back to the Act’s construction definition. It notes the Act’s subsection 89(2A) that "constructing a thing includes carrying out all associated building activities" (note under s 6). In effect, the determination sits alongside the Act’s broader definition machinery and narrows or clarifies what specific expenditures are to be capitalised for the statutory test in paragraph 89(7).

The immediate legal effect of the instrument concerns how "cost of construction" is to be calculated under paragraph 89(7) of the Airports Act 1996. Any person, entity or public body whose rights, entitlements or regulatory obligations under the Airports Act turn on the statutory measure "cost of construction" will be affected by how items are classified under this determination. That cohort includes proponents of major airport developments and the administrators of the Airports Act who must assess applications and compliance, because the instrument was made under subsection 89(8) of the Act and expressly applies for the purposes of paragraph 89(7) (s 3; ss 6-7).

Practical stakeholders likely to be materially affected when applying the instrument are:

• developers and construction contractors preparing cost schedules and claims for projects designated as "major airport developments" under the Act. They must allocate costs to the categories in ss 5-7 when presenting the statutory cost of construction.
• airport lessees/operators and their tenants because the instrument differentiates between base building fit-out and tenant fit-out (s 4). Lease drafting will determine whether particular fixtures and fittings are tenant fit-out (excluded under s 7) or base building (potentially included under s 6).
• financiers and accountants who rely on statutory cost figures for security, covenants, valuations or tax reporting, because the instrument prescribes what counts as construction cost for the statutory regime (ss 5-7).
• government regulators and decision-makers administering the Airports Act who must apply the instrument when interpreting paragraph 89(7) in decisions or approvals (s 3).
• trades and supply chain participants insofar as the definition of "costs associated with an activity or thing" (s 5) requires itemisation of material, labour and freight elements in invoicing and contracting to fit the statutory categories.

The instrument does not itself reallocate who ultimately bears costs in commercial terms; it determines which line items count for the statutory measurement. That is, the instrument affects the legal measurement used under the Act rather than directly reallocating payment responsibility between parties. For example, a developer may still pay for tenant-supplied signage, but those costs are excluded from the statutory "cost of construction" when applying paragraph 89(7) (s 7(3)). Similarly, costs of trunk infrastructure that are incurred may fall on the developer or on governments or utilities in commercial arrangements, but those costs are to be excluded from the statutory construction cost calculation (s 7(6)).

Decision-making authority is the Commonwealth Minister who made the determination (front matter) under the power in s 89(8) of the Act; operational application is the responsibility of decision-makers under the Airports Act and parties preparing submissions, financial models and agreements that depend on the statutory cost measure.

The instrument itself is a determinative interpretative instrument rather than an Act creating a separate right or duty. Its core legal effect is prescriptive: when applying paragraph 89(7) of the Airports Act, administrators, applicants and advisers must include the items listed in section 6 and exclude the items listed in section 7. That is the principal statutory duty imposed by the instrument: compliance with the interpretative rule when calculating the statutory "cost of construction" (ss 6-7).

Specific duties and consequential practical rights that flow from the text are:

• Duty to include particular construction-related items: Section 6 prescribes that the cost of construction includes site establishment, earthworks, constructing specified building elements (footings, structure, cladding, roofing), constructing or installing base services, builders' margins, and, for developments that are the construction of a new building, car parking for occupants/visitors and base building fit-out. The duty on decision-makers and applicants is to treat these items as within the statutory cost base when applying paragraph 89(7).

• Duty to treat costs associated with an activity or thing consistently with s 5: The instrument defines that phrase to include material, equipment, labour and freight costs and all taxes except GST (s 5). Practically, that requires that invoices and cost schedules be parsed to identify those elements and, where a tax other than GST is charged, to include it in the statutory base.

• Duty to exclude listed items: Section 7 sets out specific exclusions. Decision-makers must not include design, legal and financial consultant fees; construction contingencies; tenant fit-out and tenant-supplied items; costs of obtaining permits and approvals; site remediation; trunk infrastructure; financial incentives to attract tenants; car parking except as allowed under s 6 for new building occupants/visitors; landscaping, external paving and fencing; and GST (s 7(1)-(10)).

• Duty to apply the instrument’s allocation rule: The instrument contains an overriding rule that an item listed in s 7 is not included even if described in s 6 (s 6, final paragraph). That creates a priority order in classification: exclusions in s 7 prevail.

Rights that arise from the instrument are primarily rights to rely on a defined statutory measurement:

• Applicants and developers have the right to rely on the instrument’s lists when presenting the cost of construction to the regulator. The instrument provides a clear ground for arguing that certain items should or should not be counted for Act purposes (ss 6-7).
• Tenants have a right to have items classified as "tenant fit-out" excluded from the developer's statutory cost calculation if the lease shows they are provided to tenant specifications, become tenant property, or are removable by the tenant (s 4; s 7(3)).

There are a number of classification-triggering features that create practical duties on private parties drafting commercial documents:

• Lease drafting will determine whether a fit-out is tenant or base building fit-out; the definitions in s 4 make the legal right to remove, ownership status and specifications determinative. Accordingly, parties will have a duty to draft leases and fit-out schedules that reflect the intended statutory characterisation.
• Contractors and applicants will have a duty to maintain evidentiary trail for cost allocations (material, labour, freight, builders' margins and taxes other than GST) because the s 5 definition operates as the unit-of-account for included items.

The instrument does not itself create procedural duties such as requiring filings, certificates, or audits. It is an interpretative rule that must be followed when the Airports Act calls for a determination of "cost of construction." Where the Act imposes separate duties, or creates penalties for misstatement, those remain governed by the Act and its enforcement provisions rather than by this instrument.

The determination is a statutory instrument that prescribes how a defined statutory term,"cost of construction",is to be interpreted for the purposes of paragraph 89(7) of the Airports Act 1996 (s 3; ss 6-7). The determination itself does not create offences, pecuniary penalties or enforcement mechanisms in its text. There are no provisions within this instrument that establish criminal liability, civil penalties or administrative sanctions.

Consequently, any enforcement or penalty consequences that follow from an incorrect calculation or an attempt to misrepresent the statutory "cost of construction" arise, if at all, under the Airports Act or other applicable laws rather than under this determination. The instrument should therefore be read as a binding interpretative direction that must be followed in applying the Act; administrative or legal consequences for failing to comply with that direction would stem from the Act’s own compliance and enforcement framework and not from the instrument’s wording.

Practical enforcement pathways to be aware of, by reference to the instrument’s role, are:

• Administrative review or challenge: decisions by the regulator under the Airports Act that rely on a cost of construction calculation will be susceptible to administrative review, merits review or judicial review processes available under the Act and general administrative law principles where applicable. Any contested factual or legal classification of costs under the lists in ss 6-7 would be examined within those review processes. The instrument defines the legal criteria to be applied, and decision-makers must apply those criteria.
• Contractual remedies and commercial consequences: misallocation of costs between included and excluded categories may give rise to contractual disputes between developers, tenants and contractors where payments, incentives, rent or other amounts are calculated with reference to statutory cost figures. Those disputes will be resolved by contract law and commercial dispute resolution mechanisms.
• Statutory consequences under the Act: where the Act contains provisions that depend on the calculated cost of construction (for example approval thresholds, reporting obligations or financial caps), incorrect statutory measurement may affect the validity of approvals or trigger administrative obligations. Those consequences derive from the Act itself; the instrument provides the method for measurement.

Because the instrument excludes GST from the cost-of-construction calculation (s 7(10)) but includes other taxes (s 5), parties should ensure tax elements are correctly separated on invoices and in accounts to avoid mis-stating the statutory cost base. Any dispute over whether a particular tax is GST or another tax will involve the tax statutes referenced (s 4) and may require specialist tax advisory input.

In summary, the determination does not create new penalty provisions; it constrains the legal calculation that decision-makers and regulated parties must use. Any enforcement action will therefore be rooted in the Airports Act, contractual remedies, or general administrative and judicial processes, with this instrument functioning as the interpretative rule applied in those settings.

This determination operates as an instrument under the Airports Act 1996; its primary legal interaction is with the Act and specifically with paragraph 89(7) and subsection 89(2A), which the instrument explicitly references (s 3 and the note under s 6). The instrument must be read as an interpretative specification for the purposes of the Act rather than as a freestanding code.

Key statutory interactions set out in the text are:

• Airports Act 1996: The instrument was made under subsection 89(8) of the Act (s 3). It applies directly to the statutory test in paragraph 89(7) by prescribing what constitutes the "cost of construction" (ss 6-7). The instrument therefore integrates into the Act’s decision-making and approval processes wherever paragraph 89(7) is relevant.

• A New Tax System (Goods and Services Tax) Act 1999: The instrument expressly uses the GST definition from s 195-1 of that Act (s 4). It excludes GST from the cost of construction (s 7(10)) and includes other taxes in the "costs associated" definition (s 5). That creates a cross-reference to federal tax law for classification of taxes. Parties will need to look to the GST Act to determine what amounts are GST and therefore excluded.

• Regulatory approvals and permits: The instrument expressly excludes "obtaining permits, approvals or authorisations (however described)" from the cost base (s 7(4)). That creates an interaction with the rules and fees charged by local, state, or federal entities for planning approvals, environmental permits and other statutory authorisations. While such fees remain payable or recoverable under other regimes, they must not be included in the statutory "cost of construction" under the Act.

• Infrastructure charging or contribution regimes: The instrument excludes trunk infrastructure,gas mains, electricity substations and infrastructure for water, sewerage and telecommunications that is designed to be shared to a significant degree with other developments,from the cost of construction (s 7(6); s 4 definition). This exclusion interacts practically with state and local frameworks that govern contributions for shared infrastructure provision or with commercial arrangements between developers and utilities. While the instrument determines that trunk infrastructure does not form part of the statutory cost base, it does not preclude those other regimes from allocating costs or requiring payments; it only governs the Airports Act measurement.

• Lease law and property rights: Because the distinction between base building fit-out and tenant fit-out turns on lease terms,specifically whether items are provided according to tenant specifications, become tenant property, or are removable by the tenant (s 4),the instrument interfaces directly with lease drafting, the law of fixtures, and property law principles. Lease documentation will therefore determine statutory classification under the Act.

• Environmental and remediation law: The instrument excludes site remediation costs from the statutory cost base (s 7(5)). That exclusion interacts with environmental obligations under other laws; costs incurred to comply with environmental remediation requirements remain excluded from the Airports Act cost calculation despite being necessary for development.

The instrument is deliberate in its delimitation of what counts for the Airports Act while leaving other regimes intact. It does not displace taxation law, planning law or contract law; rather it prescribes how the Airports Act’s statutory metric is to be computed in the presence of expenditures governed by those other laws. Practitioners should therefore treat the instrument as providing a measurement rule that sits alongside and interacts with, but does not supersede, other legal obligations and statutory regimes.

The determination is dated 25 March 2021 and is titled the Airports (Major Airport Developments) Determination 2021 (front matter; s 1). It commences on the day after it is registered (s 2). The instrument states that it is made under subsection 89(8) of the Airports Act 1996 (s 3). The text provided contains the text of the determination as made; there is no domestic amendment provision, revision history, amendment schedule or subsequent modification contained within the instrument itself.

Because the instrument is statutory and made under the Airports Act, any amendments would occur by subsequent determinations made by the responsible Minister under the same sub‑sectional power or by legislative amendment of the Airports Act that affects the operation of paragraph 89(7) or the power to make determinations under s 89(8). The instrument does not, however, record any prior or subsequent amendments within the text supplied.

Practical implications of the absence of amendment text in the instrument are:

• The 2021 determination is a self-contained statement of the cost inclusions and exclusions as at the date of the instrument. Users should check the Federal Register of Legislation or the Commonwealth Government Gazette for any later determinations or repeals if they need an up-to-date legal position beyond the text provided.
• Because commencement is the day after registration (s 2), the timing for when the instrument becomes operative is administrative: it takes effect immediately upon registration according to the provision, and any works or cost calculations under the Act after that date must observe the instrument’s definitions.

The instrument itself includes references to other statutes (for example the GST Act) whose amendment can indirectly affect the operation of this determination, for instance by changing the definition or application of GST. Any such external amendments are not recorded in the instrument and would need to be tracked separately.

The text of the Airports (Major Airport Developments) Determination 2021 provided here contains no references to litigation, case law, judicial interpretation or prior disputes. It does not name any judicial decisions, nor does it claim to summarise or rely on judicial interpretation.

Accordingly, within the four corners of this instrument there is no recorded litigation history to report. Any legal disputes about how the instrument applies in particular factual contexts,such as disputes over whether a particular item is tenant fit-out or base building fit-out, whether a particular cost is trunk infrastructure, or whether a claimed tax qualifies as GST,would arise under the Act and be resolved by administrative review or the courts. Those cases, if any, are not listed in the instrument.

Practitioners seeking precedent or judicial commentary on the instrument’s application will need to consult external sources,decisions of tribunals and courts or administrative determinations,because this instrument does not itself summarise case law. For the purpose of applying the instrument, the statutory definitions and lists set out in ss 4-7 are the primary authority.

The instrument is concise but contains several potential classification traps and operational details that will matter in practice. The following are specific points to watch, grounded in the instrument’s text:

1. Tenant fit-out versus base building fit-out:

   • The instrument gives a lease-rights-centred definition of tenant fit-out (s 4): items are tenant fit-out if they are provided according to tenant specifications, are or become tenant property, or the tenant has a right or duty to remove them. Conversely, base building fit-out is "all fixtures, fittings and finishings that are not tenant fit-out" (s 4). This binary classification depends on contractual drafting. The "gotcha" is that minor drafting differences in leases (specifying ownership or removal rights) will move costs between the excluded and included columns (s 6; s 7(3)). Parties must ensure lease terms reflect the intended statutory classification.

2. Builders' margins included; contingencies excluded:

   • The instrument includes builders' margins in the cost base (s 6) but excludes construction contingencies (s 7(2)). That distinction can be contractually blurred: a quoted "margin" may be presented as part of a lump sum and a separate "contingency" retained elsewhere. The statutory rule requires a clear allocation. If a developer seeks to capitalise a contingency it will be excluded; if the same amount is described as a builder's margin it may be included. Accurate, contemporaneous contract documentation and invoicing are essential.

3. Taxes: GST excluded, other taxes included:

   • Section 5 includes "all taxes (excluding GST)" as part of "costs associated with an activity or thing". Section 7(10) then states GST is not included in the cost of construction. Practically, tax line items on invoices must be separated and attributed correctly. The "gotcha" is where an amount is captured as a tax in one regime but treated as GST under the GST Act; the instrument imports the GST Act definition (s 4) and that legal classification controls. Misclassification may materially change the statutory total.

4. Car parking partial inclusion:

   • Section 6 includes, for developments consisting of constructing a new building, "constructing car parking facilities for use by the building’s occupants or visitors" (s 6). Section 7(8) excludes "car parking to which subparagraph 6(1)(f) does not apply." The result is that car parking is only included in the cost base in narrow circumstances: (a) the development is the construction of a new building; and (b) the parking facilities are for building occupants or visitors. Mixed-use developments, shared parking arrangements, public-access parking or car parking provided off-site pose classification challenges. Proponents must document the intended use and the relation to the development to justify inclusion.

5. Trunk infrastructure exclusion:

   • The instrument excludes trunk infrastructure,broadly defined as shared gas mains, electricity substations and shared water/sewer/telecoms infrastructure designed to be shared with other developments (s 4; s 7(6)). The exclusion applies even if the development cannot proceed without such infrastructure. The "gotcha" is that where a developer funds a proportion of trunk infrastructure or makes contributions to shared infrastructure, those payments cannot be capitalised into the statutory cost-of-construction total. The economic incidence of such payments may influence project economics even though they are excluded for statutory measurement.

6. Permits, approvals and remediation excluded:

   • Costs of permits, approvals and authorisations are excluded (s 7(4)). Site remediation is excluded (s 7(5)). These are often significant and sometimes uncertain items in airport-related developments. Their explicit exclusion can produce a mismatch between commercial project cost models and statutory cost-of-construction figures used for the Act’s purposes.

7. Financial incentives excluded:

   • Section 7(7) excludes "financial incentives offered to attract tenants." Incentives such as rent-free periods, fit-out contributions, or other inducements must be excluded from the statutory cost-of-construction total even if they affect project returns. That exclusion may prompt developers to repackage or describe incentives in ways that seek to avoid the exclusion; the instrument’s wording is explicit and will control classification.

8. Site establishment included:

   • Temporary site infrastructure such as site offices and toilets used during construction is included as site establishment (s 4; s 6). Parties sometimes omit temporary items from capital cost schedules; the instrument requires their inclusion.

9. Overriding exclusion rule:

   • The instrument contains an express rule that if a cost is not included in the cost of construction because of s 7, it is not included notwithstanding s 6 (final paragraph of s 6). That means that the negative list in s 7 controls even where descriptions in s 6 might otherwise be broad. Practically, this priority rule curtails arguments that attempt to subsume excluded items under broad inclusion headings.

10. Narrow scope of the instrument:

• The instrument governs only the meaning of "cost of construction" for the purposes of paragraph 89(7) of the Airports Act. It does not purport to govern tax treatment, accounting depreciation, or other regulatory measurements. Confusion across regimes is a routine operational risk. Practitioners must maintain separate allocations where different statutory, tax or accounting frameworks require different treatments.

These are not hypothetical ambiguities; the instrument’s precise wording drives classification outcomes. Properly managing these "gotchas" requires careful drafting of contracts and leases, precise accounting schedules that separate line items (GST versus other taxes; margins versus contingencies; base building fit-out versus tenant fit-out), and documentation demonstrating the intended use of assets such as car parks or shared infrastructure.

Compliance with this determination is primarily a matter of correct classification, transparent record-keeping, and careful contract and lease drafting. The following practical checklist and steps, grounded in the determinative provisions in ss 4-7, set out what parties should do to comply with the instrument when preparing cost-of-construction figures for the purposes of paragraph 89(7) of the Airports Act.

1. Start with the definitions (s 4):

   • Read and apply the instrument’s definitions for base building fit-out, tenant fit-out, base services, site establishment, earthworks, and trunk infrastructure. Record and justify, in a short legal note, why each relevant cost item falls within the instrument’s defined categories.

2. Prepare a cost ledger split to the instrument’s categories (s 5; ss 6-7):

   • For each cost line create a ledger entry identifying whether it is claimed under s 6 (included) or s 7 (excluded).
   • Ensure every "costs associated with an activity or thing" entry identifies the material, equipment, labour and freight components and separately identifies taxes other than GST (s 5).
   • On all invoices ensure GST is separately shown and is not aggregated into a lump-sum tax figure that might obscure exclusion under s 7(10).

3. Distinguish builder's margin from contingencies (s 6; s 7(2)):

   • Maintain contractual and invoice evidence showing a builder’s margin as an identifiable component of contract price if it is to be included. Do not aggregate contingency sums into the margin; if an amount is a contingency it must be excluded.

4. Lease and fit-out provisions (s 4; s 7(3)):

   • Draft or amend leases and fit-out schedules so that ownership, removal rights and specification responsibility are explicit. To claim base building fit-out as part of the statutory cost, ensure the lease does not give tenants a right to remove the items, does not make them tenant property and does not require the tenant’s specification.
   • If tenant-supplied items are expected, ensure relevant invoices and delivery documents clearly attribute ownership and responsibility to the tenant.

5. Document the use and character of car parking (s 6; s 7(8)):

   • If asserting inclusion of car parking costs, document that the development consists of constructing a new building and that parking is for the building's occupants or visitors. Retain plans, signage, and lease schedules that demonstrate intended use.

6. Separate trunk infrastructure and shared infrastructure contributions (s 4; s 7(6)):

   • Identify and segregate any payments for trunk infrastructure. If a payment funds shared infrastructure designed to serve other developments, record it separately and exclude it from the statutory cost base.
   • Where contributions are made to a utilities authority or government entity for shared infrastructure, obtain clear documentation of the purpose and share of the payment.

7. Exclude permits, approvals, remediation and incentives (s 7(4)-(7)):

   • Keep permits, application fees, environmental remediation costs and tenant incentives as separately reported line items outside the statutory cost ledger. Retain invoices and contractual evidence to show these costs were incurred and excluded.

8. Maintain an audit trail and supporting evidence:

   • For every classification decision keep contemporaneous documentation: contracts, tender documents, invoices showing line items (material, labour and freight), tax invoices displaying GST separately, lease terms setting out specifications/ownership/removal rights, and board/management approvals of contractors’ pricing.
   • Produce a short legal memorandum explaining the classification methodology with references to the relevant paragraphs of the instrument.

9. Coordinate with accountants, tax advisers and financiers:

   • Ensure that the statutory cost-of-construction ledger produced for the Airports Act purpose is reconciled to project accounting and tax ledgers, with explanation of differences required by tax or accounting rules. Because the instrument’s treatment of GST and other taxes differs from other regimes, reconciliation notes are essential.
   • Notify financiers and security trustees that the statutory cost base is calculated under the instrument; if finance facilities rely on statutory cost measures, obtain agreement on how the instrument’s classification interacts with facility covenants.

10. Prepare for regulatory review:

• Because the instrument is an interpretative rule used by decision-makers under the Airports Act, be prepared to justify classifications in submissions and in any administrative review process. Provide clear references to the wording of ss 4-7 and attach the supporting documentation set out above.

11. Update templates and procurement briefs:

• Procurement and contracting templates should require separate line-itemisation and tax breakdowns. Tenderers must be instructed to separate builder margins from contingencies and to flag any items that might be considered tenant fit-out or trunk infrastructure.

12. Monitor legislative and instrument changes:

• Although the instrument contains no amendment record in the text provided, practitioners should regularly check the Federal Register of Legislation for any subsequent determinations or changes to the Airports Act that might affect paragraph 89(7) or the operation of this instrument.

Following these steps will not change who actually pays for the items in commercial terms, but it will ensure that the statutory "cost of construction" used for Airports Act purposes is prepared consistently with the instrument. The keys to operational compliance are clear contractual drafting (especially lease terms), accurate invoice-level accounting that separates GST and other taxes and a contemporaneous evidentiary record that supports each classification decision in relation to the instrument’s lists in ss 5-7.