On land zoned R1 and RU, residential water tanks up to 10,000 litres may be installed without approval providing they comply with the conditions of the State Governments 'exempt development code'.
If your plans don't meet the exempt criteria you'll need to apply for a complying development certificate or a Development Application.
It is important that all tanks are installed in accordance with manufacturer's specifications. Particular attention needs to be given to the supporting base upon which the tank will be located. Every 1,000 litres of water weighs one tonne and as many tanks can contain a considerable amount of water, proper base preparation is essential. This will ensure the tank does not lean or topple or cause damage to pipes and drainage lines. Additionally, tanks should not impede access for building and fence maintenance or inspection as this may lead to problems later on.
The overflow from a tank is required to be disposed of in an approved manner, so as not to cause a flooding or nuisance problem to adjoining properties. In most cases this will mean connecting the overflow into an approved stormwater system for disposal to the street gutter or to a drainage easement.
New houses and certain additions and alterations are required to provide water tanks under current legislative provisions, known as BASIX. In the interest of conserving water, tanks are connected to laundries, toilets and garden taps. Town water is used to top up the tanks to ensure continuous supply is maintained in dry times.
Owners of existing houses can provide similar systems however it is important to note that the work must be carried out by a licensed plumber to ensure a safe supply and to prevent contamination of the town water supply.
The BASIX website can provide you with additional information.
Where a reticulated town supply is available, the NSW Department of Health recommends that rainwater from tanks not be used for human consumption.