Since March 2018, project bank accounts (PBAs) have been required for certain Queensland Government projects valued between $1 million and $10 million (including GST). To simplify the regime, in 2020, the Queensland Government amended the Building Industry Fairness (Security of Payment) Act 2017 (the BIF Act).
Now, Project Trust Accounts are also required for non-government contracts in Queensland. The Queensland Building & Construction Commission (QBCC) now requires head contractors to establish a Project Trust Account for each project or contract they are awarded.
Deposits and payments relating to the specific project can only flow from the Project Trust Account. For example, funds from Project A cannot be used to buy materials or pay subcontractors from Project B. Understanding these new requirements and proactively planning for the impacts on your processes and cash flow will be critical for future proofing your business.
The new requirements for the private sector are being rolled out progressively, with projects worth $10 million or more requiring trust accounts from 1 January 2022. From 1 July 2022, it will expand to include contracts worth $3 million, and from January 2023, projects worth $1 million will be required to have a Project Trust Account.
Ensure compliance by understanding the requirements and processes to open a Project Trust Account:
- Trust accounts can only be opened with an approved financial institution and must meet certain trust account requirements;
- Companies must notify QBCC the Project Trust Account has been opened;
- All parties (i.e. head contractor and subcontractor) are required to also have a Retention Trust Account if they hold retentions on their contracts. They are only required to have one account to maintain across multiple projects, but the account must meet the criteria above.
- Retention trust account review reports (undertaken by an independent company auditor) will be required to be submitted to QBCC annually. They may also be required to Project Trust accounts by QBCC.
The QBCC has already indicated their focus will be on a failure to open a trust account, foreseeing that as the most likely form of non-compliance in the private sector. Therefore, it is important that you prepare your business for the new requirements.
If you operate within the construction industry, contact us to discuss your business processes and cash flow management and get prepared for the implementation of the Project Trust Accounts .