Project Trust Accounts (formerly PBAs)
In 2017, the Building Industry Fairness (Security of Payment) Act 2017 introduced project bank accounts as a means of protecting payments for subcontractors.
The BIFOLA reforms have taken existing project bank accounts and streamlined them into a simplified trust account framework. The new project trust accounts will continue to protect payments to contractors, as well as reduce the administrative burden for head contractors.
From 1 March 2021 the new trust account model will apply including the following changes:
- fewer accounts required – one trust account per project, but only one retention trust account per contractor (formerly one per project) – the disputed funds account has been removed and replaced by added protections for subcontractors
- more subcontractors protected – by extending the range of work that is covered by the project trust account
- statutory charge over trust retention amounts – will make beneficiaries secured creditors in the event of bankruptcy
- viewing access for principals – will be removed as a requirement for trust accounts
- the QBCC will have greater oversight – of the trust account framework including the ability to undertake audits, require independent audits of accounts, receive notifications about trust accounts, freeze trust accounts and appoint a special investigator.
Until then the current PBA requirements continue for certain State Government building projects valued between $1M - $10M.
Contractors who open a PBA under the current requirements will be able to transition over to the new streamlined framework when those laws commence.
When do these reforms commence?
The new Trust Account requirements will be phased in gradually to ensure industry has time to adapt and prepare for the changes – eligibility for each phase will be defined by who is the project owner (or principal), the contract price for the project, and whether there are subcontractors engaged by the builder as outlined below:
|PTA phases||Applies to|
1 March 2021
Eligible state government contracts valued between $1M and $10M. This cohort presently uses Project Bank Accounts (PBA).
|1 July 2021||Government and Hospital and Health Services (HHS) building and construction contracts valued at $1 million or more.|
|1 January 2022||Private sector, local government, statutory authorities’ and government-owned corporations’ building and construction contracts valued at $10 million or more.|
|1 July 2022||Private sector, local government, statutory authorities’ and government-owned corporations’ building and construction contracts valued at $3 million or more.|
|1 January 2023||All eligible building and construction contracts valued at $1 million or more (full implementation); and subcontractors working on project trust account projects will also be required to hold cash retentions in a retention trust account.|
Further information about the new reforms can be found on the Queensland Government’s website.
For specific questions relating to these reforms please contact the Department of Housing and Public Works at email@example.com.