Transitioning project bank accounts

 

Trustees under the project bank account (PBA) framework have the option of transitioning their PBA trusts to the new trust account framework from 1 March 2021 – time limits and conditions for transitioning apply.  

For more information on transitioning a PBA to the new trust account framework, refer to the Trustee guide: Transitioning from project bank accounts to the new trust account framework. 

Continuing a project bank account 

If you are currently using a PBA, it is NOT mandatory to transition to the new trust account framework and you can maintain your PBA for the life of the contract. 

If you choose NOT to transition to the new framework, all the rights, obligations and offences applicable under the PBA model continue to apply for the life of the contract and record keeping requirements will continue for seven years after the end of the contract.

Transition timeframes

A contracted party (for example, head contractor) required to have a PBA, can transition to the new framework as follows: 

  • for active accounts, between 1 March 2021 and 31 August 2021
  • for accounts not yet open, anytime on or after 1 March 2021 (including where a contract variation triggers the PBA requirement).

It is important to discuss your intentions to transition to the new trust account framework with your principal to confirm timeframes, due dates for progress payments and any contractual requirements that may need to be met before or after the transition.

When transitioning former PBA accounts, the NEW trust accounts must be opened with an approved financial institution.

NOTE: If there are disputed funds held in the disputed funds account, the PBA  cannot transition to the new trust account framework.

How to transition

  1. Choose an approved financial institution 
  2. Open the new project trust account (PTA) and a retention trust account (if applicable). 
  3. Transfer trust funds to the new trust accounts. 
  4. Provide a notice of transition to each subcontractor beneficiary (provide them a copy of the Beneficiary guide: trust accounts (PDF))
  5. Close the PBA 
  6. Keep all PBA records for 7 years. 

Obligations for principals

Principals who are currently involved in PBA are required to monitor accounts and notify the QBCC of certain discrepancies – this obligation continues until the former PBA is transitioned, or dissolved and closed at the end of the project. 

For more information, see the Business Queensland website or download the Building industry fairness reforms: project bank accounts - principal guidelines (PDF, 1.1MB).

Key changes between project bank accounts and new trust accounts.

More details about the differences between the project bank account model and the new trust account framework are provided below.

Number and structure of accounts

Project bank accounts

Required three accounts per eligible contract:   

  • 1 x general trust account 
  • 1 x retention trust account 
  • 1 x disputed funds trust account.

Trust account framework

  • 1 x PTA per eligible contract 
  • 1 x RTA for cash retentions withheld by the contracting party (for example trustee) across all projects.
Opening accounts and using the accounts

Project bank accounts

  • any financial institution (provided trustee could ensure required functionality). 
  • name of account required to include the word ‘trust’
  • payment instructions given to financial institution for withdrawals or transfers. 

Trust account framework

  • approved financial institution only for both PTAs and RTAs
  • name of account required to include the word ‘trust’ and the name of the trustee
  • withdrawals or transfers made using any method that creates an electronic record.
Trust oversight

Project bank accounts

  • the principal has direct oversight including having viewing access to the account at the financial institution
  • the principal receives all relevant PBA notices including notification of all payments to beneficiaries (e.g. payment instruction information)
  • limited notifications required to be given to the QBCC.

Trust account framework

  • QBCC has oversight of trust account compliance and receives relevant notices.
  • new audit and investigation powers for the QBCC
  • the principal is NOT required to have direct oversight 
  • viewing access to the account at the financial institution is NOT required (including NOT by QBCC)
  • the principal is not required to be notified of all payments to beneficiaries
  • trustees must keep a separate trust account ledger for each trust, carry out monthly bank reconciliations and engage an auditor to carry out an annual retention trust account review.

This infographic summarises the changes to the number and types of accounts required between the outgoing project bank account model and the incoming trust account framework.