Webinar: Trust account overview and eligibility | Queensland Building and Construction Commission

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Trust account overview

Q&A from the webinar


Does a Principal have visibility on what costs a head contractor has paid to subcontractors? 

No, under the new trust account framework, the principal no longer has viewing access to the accounts (this was a requirement under the previous PBA framework) and therefore will not be able to see what amounts a head contractor has paid to subcontractors. 

However, the Principal should have visibility on what amounts a head contractor has NOT paid to subcontractors. This is because a head contractor is required to include a supporting statement with every payment claim that they give to the Principal. The supporting statement is a written document that declares that all subcontractors have been paid or if not outlines the reasons for withholding or non-payment and the amount that is unpaid. 

Please note that there may be terms within your contract that require additional notifications or obligations on you that are not a requirement of the legislation. 

What happens when a client doesn’t pay the head contractor and the trust account goes cash negative for the month?

If a project trust account doesn’t have enough funds to pay beneficiaries the full amount when they are due to be paid, the trustee (head contractor) is required to top up the account with a sufficient amount. It is an offence not to cover these shortfalls.

Once the client (principal) pays the outstanding amount into the trust account, the head contractor can reimburse itself from the trust account for the top up amount

In the past suppliers were not allowed to be paid out of the project bank account i.e. the total amount of supplier payments for that claim had to be transferred to the company's normal operating account and paid out of there.  Is that still the case?

Yes, that is also the case under new trust account framework. Payments to a party who is not a beneficiary of the account, e.g. a head contractor’s employees and suppliers, cannot be made from the project trust account.

The head contractor is able to withdraw funds from the project trust account during the project to pay themselves amounts they are entitled to be paid, which would include amounts to pay employees and suppliers. 
Note that there is the requirement for the head contractor to top up the project trust account if there is a shortfall in funds available to meet subcontractor payments.

Are all offsite subcontractors to be paid out of the Project trust now? Or still only those subcontractors which require a licence to carry out work such as electricians and plumbers?

It is the type of work they carry out that determines who are subcontractor beneficiaries and whether they are to be paid from a project trust account. A party who is engaged by a head contractor to carry out ‘protected work’ or ‘related services’ are to be paid from the project trust account. Protected work is defined broadly to include all types of building and construction work.

Generally, their work is performed onsite, however some types of protected work may occur offsite (e.g. prefabrication of modular buildings).

Related services include certain design, advisory and testing services

Is it correct that suppliers that are manufacturing goods, even when they are not going to site, are considered to be eligible to be paid out of the project trust account?  

You need to consider the definition of ‘protected work’ in determining who is to be paid from a project trust account. 
The specific inclusions within the definition which specifies that the parties carrying out the following types of work must be paid from the project trust account:  

  • the installation of prefabricated components of a building; 
  • the installation in any building or other works of fittings forming, or to form, part of land, including heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems; and
  • the prefabrication of complete buildings or components of a building or other works, whether carried out on-site or off-site. 

Generally speaking, workers prefabricating complete buildings or components of a building (e.g. modules) would be considered subcontractor beneficiaries of a project trust (and therefore paid from the project trust account). However, it is not the intent to capture parties contracted to supply ‘on/to order’ building materials such as windows, doors, cabinetry or furniture.

The confusion arrives with the prefabricated clause in the legislation. The cabinet maker is prefabricating and in some cases installing the cabinets. Made to order windows are the same. I would consider them a supplier generally but then they are prefabricating windows which we install into a building. 

Flat pack and standard product lines (such as windows) which might be made on order, can still be considered 'suppliers'. It is only where a specialist product that is designed and made that we might consider them a subcontractor. Similar to the previous answer, it is not the intent to capture parties contracted to supply ‘on/to order’ building materials such as windows, doors, cabinetry or furniture.


Are State Authorities exempt from requiring a project trust account? Further to this, do State Authorities include Local Council's?  And does this exemption only apply until January 2022?  

Contracts between the State and a State Authority (including local councils) are exempt from project trust requirements, and they will always be (there are no changes to this exemption as the phases progress). 

This is different however to situations where a State Authority enters into a contract with a private entity. From 1 January 2022, the contracted party (private entity) may require a project trust (if the other eligibility criteria is also met).

Where the Principal is the Qld Government, who contracts to the Local Council, who then subcontractors to us the Builder, will we be required to open and manage the project trust account?  

Generally, only head contracts will require project trusts. As a subcontractor, you do not need to open a project trust account (unless you are a related entity to the head contractor and you have entered into contract on a project trust project). 

In the scenario you have illustrated, the head contractor is exempt from requiring a project trust because it is a contract between the State and a State Authority. However, if there is a funding agreement in place (and not a building contract) between the State and Local Government, the first tier building contract is the one between the Local Government and the building contractor (head contractor). This contract would need to be assessed against the following project trust eligibility criteria: 

  1. The contracting party is as specified for the relevant phase AND
  2. The contract value is as specified for the relevant phase AND
  3. More than 50% of the contract price is for project trust work AND
  4. There is at least one subcontractor engaged for all or part of the contracted work.

If all four of the eligibility criteria are met and the contract is not exempt, a project trust is required. 

For more information:

If the contract documents identify a 20 week duration (past the 90 day criteria) but the builder can demonstrate via a program during the tender that they can deliver within 90 days does this trigger the exemption?

It is important to note that the 90 day timeframe starts from when the contract would otherwise become eligible (the trigger date). The trigger date may NOT be the contract date, but rather, the date the first subcontract is entered into (or the date of an amendment to the head contract that makes it now eligible for a project trust account).

So, the answer depends on what the practical completion date is expected to be, compared to the ‘trigger’ date:

  • if it is 90 days or more until the expected practical completion from the ‘trigger’ date, then the contract will require a project trust (note: a contract cannot stop being eligible for a project trust account once it has met the eligibility criteria – a project trust account must be established and remain in use throughout the project).
  • if it is less than 90 days until expected practical completion from the trigger date, then the contract will not require a project trust.
  • it’s highly recommended that the practical completion date is documented and agreed to by all contract parties as is seeking your own independent legal advice on the matter. 

What if the original practical completion date was within 90 days, but extensions of time push the actual practical completion date past 90 days?

The head contractor is responsible for reviewing the 90 day exemption every time an amendment or variation is made that is likely to affect the practical completion date (including any extensions of time). 

A project trust will be required if the expected practical completion date changes from less than 90 days to 90 days or more past the trigger date (the date the contract would have otherwise become eligible), so long as all other criteria are met.

If you are relying on this exemption, it is highly recommended that the practical completion date is documented and agreed to by all contract parties.

Where a head contract is a standing offer arrangement, should all projects awarded under that standing offer use the same project trust account? Or does each separate order have its own project trust?

Whilst there are some exceptions, generally each separate 'purchase order' is considered its own separate project and will need to be considered against the eligibility criteria and may need their own project trust account.

If you have a supplier over $1 million which is predominantly 75% supply, should this be under PBA?

The answer will depend on your position in the contract chain:

  1. If you are a principal, then your supplier will not be required to open a project trust account, as the contract does not meet the criteria requiring more than 50% of the contract price to be for project trust work.
  2. If you are a head contractor, then you will need to assess your head contract against the project trust criteria (rather than the supplier contract), then consider the following to determine if your supplier must be paid from a project trust account.

If the supplier is carrying out any work that is within the definition of ‘protected work’, then they will be considered a subcontractor under the project trust framework. The value of the subcontract is not used to determine if they are a beneficiary.


Do we need to advise the QBCC when a subcontractor has been engaged (subcontractor agreement/contract)?

No, there is no requirement to notify the QBCC about the engagement of subcontractors. 

Previously with Project Bank Accounts (PBAs), Subcontractors had to provide us with their bank account details and these were then to be provided to the Principal. Just wanting to confirm that this step is no longer required?

That is correct. Trustees are no longer required to provide subcontractor’s bank account details to the principal.

Even though we no longer need to send payment advices to the principal, we still need to send a payment advice to the subcontractor. Is that correct?

Yes, that is correct. After payment, certain information confirming the payment needs to be given to subcontractors. This can be given in the form of a remittance advice for example.

On previous government contracts, we needed to advise of a payment to a subcontractor via a Form S50. Will this still be required?  

No, this is not required when operating a trust under the new trust account framework. Because the oversight functions for trust accounts have shifted from project principals to the QBCC, there is no longer any requirement for the trustee to advise the principal: 

of the subcontractor’s bank account information (former s50 notice); or 
b)that a subcontractor has been paid (former s51 requirement).

To be clear, trustees operating under the Project Bank Account (old) framework are still required to give those notices to the principal. It may also be worth checking your contract conditions for notification requirements that are additional to the legislative requirements. 

Should the supporting statement given to the principal list all invoices which have retentions withheld or does an 'amount unpaid' only refer to amounts which may be disputed?

The supporting statement should only include owed amounts where the due date for payment has passed and amounts are liable to be paid (and have not been paid) at the time of submitting your payment claim to the principal.

Therefore the supporting statement should not include retention amounts that are being withheld under the terms of the contract that are not yet due to be paid. If a retention amount is due to be released and has not yet been paid, it should be included in the supporting statement.


What about viewing rights to the accounts?  Previously we had to give the Principal (Qld Gov) viewing access to the actual account.  Is this no longer required?

Yes, that is correct. Account viewing access for the principal is not required under the new trust account framework. 

Can you choose to have separate retention accounts for each project?

Yes, a contracting party can have multiple retention trust accounts although the legislation only requires one retention trust account per contracting party. This account or accounts are to hold cash retention amounts across eligible projects. 

If the Principal holds retentions for 12 months after the project is completed, can we still close the project trust account and the final payment from the Principal can be made into an existing bank account?

A project trust account can only be closed: 

  1. for the purpose of changing financial institutions, 
  2. if there are no longer any subcontractor beneficiaries, or 
  3. if the only remaining work to be carried out for the project is maintenance work.

In some situations, retentions will be due for release by the principal after the project trust account has been closed. In these situations, the retention amounts are to be released to the contracted party’s nominated account. This is why it is important to notify the Principal when closing the project trust account for the project.

Does head contractor have obligations to ensure subcontractors have set up their trust account (if required)?  

Generally they will not, however if the head contractor has engaged a related entity subcontractor who is required to open a project trust account and has not done so, the head contractor should report that failure to the QBCC

Last reviewed: 20 Jul 2021 Last published: 20 Jul 2021
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