Rules for using a trust account

A trustee, as a contracting party to a building contract, is legally and contractually required to pay their contractors on time – and in full – for work completed. 

A trustee must follow strict rules when using a project trust or retention trust and to ensure it protects payments and retention amounts for all beneficiaries. 

In general:

  • principals (for example, the developer or project owner) must pay amounts related to the contracted work into the project trust account ONLY and not the trustee’s personal or business account (for project trust account only)
  • all payments to contracted parties who are ‘beneficiaries’ must be paid ONLY from the required trust accounts 
  • all payments (deposits and withdrawals) must create an electronic record of transfer
  • provide written payment notice to the relevant beneficiary within 5 business days after making a deposit or withdrawal – see trust account notices for more information
  • immediately cover any shortfall if there are insufficient funds by depositing the shortfall amount into the relevant account
  • an amount equal to the interest earned by the trust accounts may be withdrawn every 12 months or when the trust is dissolved and closed
  • keep a separate ledger for each trust account and record all deposits and withdrawals affecting the trust in the ledger within 5 business days of the transaction occurring
  • complete a monthly bank reconciliation for each trust account within 15 business days after the end of each month – read more about trust accounting and recordkeeping requirements
  • engage an independent auditor to complete an annual retention trust account review and provide a review report to the QBCC – read more about annual trust account reviews
  • notify the QBCC if you nominate another person to administer the retention trust account on your behalf – see trust account notices for more information
  • keep trust records and copies or related documents for a minimum of 7 years. 

The trustee cannot:

  • transfer amounts or payments into or out of the trust for any purpose other than paying beneficiaries
  • withdraw an amount from a trust account to pay themselves unless enough funds will remain after the withdrawal to pay all amounts liable to be paid to beneficiaries
  • directly pay suppliers from the trust unless they're considered subcontractors beneficiaries under the BIF Act
  • pay themselves from the retention trust until after the defects liability period ends
  • recover payment for administration or bank fees from a beneficiary or from funds held in trust
  • use amounts that have been paid, or are required to be paid, into a trust account for payment of the trustee's debts or taken in execution under a court order for the benefit of a trustee's creditors
  • invest amounts held in a trust account in any form of investment (except for interest earned on the accounts)
  • dissolve the trust while subcontractor beneficiaries remain in the trust.

The project trust account guide and retention trust account guide explains how a trustee can meet all their obligations when using a trust account.