Trust account framework
Security of payment in the building and construction industry is a priority for the Queensland Government. A review of the first phase of Project Bank Accounts (PBA) by the independent Building Industry Fairness Reforms Implementation and Evaluation Panel recommended a simplified model.
The new framework will reduce the number of trust accounts. Currently, 3 trust accounts must be established:
- general account
- retention account
- disputed funds account.
Under the new framework:
- a trust account will need to be established for each eligible contract
- a retention trust account will only be needed if cash retentions are held
- only 1 retention trust account will be needed per contractor to hold all of the retentions on project trust projects.
Other changes include:
- The disputed funds account will no longer exist, but subcontractors will be better protected because the project trust account will cover a larger range of work.
- There will be a statutory charge over retention amounts held in trust. This charge will make the subcontractor a secured creditor in the event of bankruptcy or insolvency.
- There will no longer be a requirement for the principal to have viewing access of the trust accounts.
Once full implementation is reached, all subcontractors down the chain in a trust account project will have the benefit of a retention trust.
The Queensland Building and Construction Commission will take a greater role in making sure the industry complies with the trust account framework. They will be able to:
- undertake audits
- require independent audits of accounts
- receive notifications about trust accounts
- freeze trust accounts
- appoint a special investigator.
The new project and retention trust account framework will be phased in gradually to all eligible building and construction contracts valued at $1 million or more. This will make sure that the industry has time to adapt and get ready for the changes.
From 1 March 2021, the new trust account framework will apply to eligible state government contracts valued between $1 million and $10 million. These kinds of contracts already use project bank accounts.
The trust account framework will apply to other eligible building and construction contracts in four phases:
- 1 July 2021—government and Hospital and Health Services contracts valued at $1 million or more.
- 1 January 2022—private sector, local government, statutory authorities’ and government-owned corporations’ contracts valued at $10 million or more.
- 1 July 2022—private sector, local government, statutory authorities’ and government-owned corporations’ contracts valued at $3 million or more.
- 1 January 2023—all eligible contracts valued at $1 million or more.
- Last updated:
- 16 December 2020