Do I need a trust account?
Trust accounts are required in certain circumstances – there are different criteria determining when project trusts and retention trusts are required.
When project trust accounts are required
A project trust is required if all four criteria apply to the contract:
- the contracting party is as specified for the relevant phase AND
- the contract price is as specified for the relevant phase AND
- more than 50% of the contract price is for project trust work AND
- there is at least one subcontractor engaged for all or part of the contracted work.
Even if all four of the above criteria apply, some contracts are exempt from requiring a project trust account:
- contracts relating to small-scale residential construction work
- contracts solely for maintenance work
- contracts primarily for civil work i.e. less than 50% project trust work
- contracts between the state government and a state government authority
- contracts solely for professional design, advisory or contract administration work
- short term contracts for work that is to be completed in less than 90 days.
There are also some situations where a project trust may be required after a contract amendment/variation or if there are multiple contracts between the same parties for the same or adjacent sites.
Not sure if you need a project trust account? The QBCC has developed a project trust account tool to help you quickly and easily determine if your contract is eligible and requires a project trust account.
Construction work relating to a building
- erection or construction of a building
- renovations, extensions or repairs of a building
- lighting and electrical work
- water supply, sewerage or drainage
- heating, ventilation and air-conditioning work
- installing prefabricated components
- wet pour rubber.
Related site work
- site work related to construction work (e.g. the construction of retaining walls)
- soil testing and site classification
- earthmoving and excavation
- scaffolding erection, management and removal
When associated with the building:
- preparing plans or specifications for project trust work
- work performed by an architect
- work performed by a registered professional engineer
- work performed by a surveyor
- mechanical services work
- fire protection work
- inspection and treatment of termite infestation or management systems
- contract administration (when they have also designed the building).
Inspections and advice
When associated with the building:
- carrying out a building inspection
- building certification work
- energy efficiency assessments
- fire safety advice,
Swimming pool construction, installation, alterations and repairs (whether associated with a building or not).
When retention trust accounts are required
All ‘eligible’ cash retention amounts MUST be held in a retention trust account.
Therefore, certain contracting parties, who withhold ‘eligible’ cash retention amounts, will require a retention trust account.
An ‘eligible’ cash retention amount is one that meets BOTH of the following criteria in relation to the withholding contract:
- a project trust is required for the head contract (that is, the head contractor has or must have a project trust) – AND
- the contracting party (that is, the person withholding the retention amount) is as specified by the relevant phase:
- from 1 March 2021, this will only be a head contractor who is also required to establish a project trust
- from 1 January 2022, this will be both - the first-tier contracting party (for example principal, owner or developer) and the head contractor who is required to establish a project trust
- from 1 January 2023, this will be the first-tier contracting party (for example principal, owner or developer) the head contractor, AND any subcontractor engaged (down the contracting chain) under the related project trust head contract.
There are some exemptions that may apply which will mean a retention trust account is NOT required - a contracting party who is a state government department, a state authority (including a Hospital and Health Service) or a local government is exempt from the requirement to establish a retention trust account.