Trust account framework
Security of payment in the building and construction industry is a priority for the Queensland Government. A review of Project Bank Accounts (PBA) by the independent Building Industry Fairness Reforms Implementation and Evaluation Panel recommended a simplified model.
The new trust account framework commenced on 1 March 2021 and replaces the PBA framework.
It has been simplified by reducing the number of trust account from three trust accounts (general trust account, retention trust account and disputed funds trust account) to:
- One project trust account to be established for each eligible contract
- One retention trust account per contractor to hold all cash retentions for contracts under a project trust account project.
Other changes include:
- The disputed funds account no longer exists, but subcontractors will be better protected because the project trust account will cover a larger range of work.
- There is a statutory charge over retention amounts held in trust. This charge makes the subcontractor a secured creditor in the event of bankruptcy or insolvency.
- Principals no longer 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 (QBCC) 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.
The first phase began on 1 March 2021 and applies to eligible state government contracts valued between $1 million and $10 million. These kinds of contracts used 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.
- Detailed guide on the new trust account framework (QBCC)
- Building Industry Fairness (Security of Payment) Act 2017
- Building Industry Fairness (Security of Payment) Regulation 2018
- Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020
- Last updated:
- 2 March 2021