Project Trust Accounts (PTAs)

In simple terms, a project trust account is an account set up by the head contractor at a financial institution for a contract commercial construction project. All project payments received by the head contractor from the principal (e.g. a developer) under the head contract are paid into the project trust account. The head contractor then pays their directly contracted subcontractors for the project and themselves from the project trust account.

Depending on the circumstances, a project trust account is sometimes required to be set up by a subcontractor where they have entered a subcontract on a commercial project with a related entity head contractor (e, g. the subcontractor is a subsidiary company of the head contractor).

If a subcontractor is required to open a project trust account, progress payments from the head contractor to the subcontractor are paid into the account. The subcontractor then pays themselves and their directly contracted sub-subcontractors from the project trust account.

Head contractors are only required to open a project trust account if their head contract with the principal is a contract that requires a project trust under the BIF Act.

There are a range of factors that determine whether a head contract requires a project trust (and therefore, the opening of a project trust account), including the contract price and type of work.

For example, a project trust is only required at present for state government, hospital and health service head contracts valued at $1 million or more and local government and private sector projects valued at $10 million or more. However, these amounts are under review by the State Government and may change in the future.

A quick way to work out if your head contract requires a project trust is to use the QBCC project trust tool. The tool is free and can be accessed on the QBCC website.

A subcontractor is only required to set up a project trust account if all the following apply:

• The subcontractor is a related entity to the head contractor (e.g. a subsidiary company).
• The subcontractor has entered a subcontract with the head contractor (called a “first tier subcontract”)
• The head contract requires a project trust.
• The subcontractor engages one or more sub-subcontractors.

The short answer is yes.

Common examples where a project trust account for a head contract will never be required include where the contract is for:

• The renovation, repair, or construction of one or two detached dwellings (regardless of the contract price); or
• Renovation, repair or construction of a duplex (regardless of the contract price); or
• Renovation or repair one unit or two units in a multiple dwelling (regardless of the contract price); or
• Work under a head contract with a contract price that is less than $1 million; or
• Work under a head contract where the contract price is less than the amount prescribed in the BIF legislation (see above); or
• Work where the contracted practical completion date is less than 90 days; or
• Maintenance work only.

A subcontractor will not be required to set up a project trust account if any of the following apply:

• they are not related to the head contractor; or
• the head contract does not require a project trust, or
• they do not engage a sub-subcontractor.

A project trust account must be opened at a financial institution that has been approved by the QBCC. A list of QBCC approved financial institutions is published on the QBCC’s website (see - Approved financial institutions)

A separate project trust account must be opened for each eligible contract that requires a project trust.

In most cases the eligible contract requiring the project trust will be the head contract between the principal and the head contractor. The head contractor, not the principal, must open the project trust account.

A subcontract between the head contractor and a related subcontractor (e.g. a subsidiary) will be an eligible contract if the head contract requires a project trust and the subcontractor engages a sub-subcontractor. The related entity subcontractor is required to open the project trust account for the subcontract.

For head contractors, the project trust account must be opened within 20 business days after entering your first subcontract. For a related first tier subcontractor, the project trust account must be opened within 20 days after entering your first sub-subcontract.

The legislation also includes provisions for the opening of a project trust account partway through a project due to a head contract amendment triggering the need for a project trust (see section 14A and section 18 of the BIF Act). However, applying these provisions can be quite complex. Members are encouraged to contact us, or their legal representatives, for guidance if they believe that they may be in this situation.

When opening the project trust account at a QBCC approved financial institution, it is a legislative requirement that the account name include the trustee’s name and the word ‘trust’.

If a project trust is required for a head contract, the head building contractor is automatically appointed by legislation as the trustee. In this capacity, the head contractor must set up and administer the project trust account for the project trust in accordance with the BIF Act.

The administrative obligations of a head contractor trustee when administering a project trust are quite extensive.

Some of the key obligations include ensuring the following:

• All progress payments from the principal to the head contractor under the head contract must be deposited into the project trust account.
• The head contractor’s first tier subcontractors for the project must be paid all amounts they are entitled to be paid under their subcontracts directly from the project trust account.
• The head contractor must be paid any amounts owed to them under their head contract directly from the project trust account.
• The head contractor only pays themselves amounts from the project trust account if, at the time of the proposed withdrawal, there are sufficient monies remaining in the project trust account to pay all amounts that are “liable to be paid” to their subcontractors.
• If there are insufficient amounts in the project trust account to pay a subcontractor an amount owed on the due date for a payment claim, the head contractor/trustee must top up the project trust account to enable the payment claim to be paid.
• Suppliers engaged by the head contractor and the head contractor’s employees are not beneficiaries of the trust and must not be paid from the trust account.
• All prescribed notices about the operations of the project trust account are sent to the QBCC, the principal and subcontractors as required by the BIF Act. (Information about the required notices, including time frames and content can be found on the QBCC website - see Required trust notices).

Related entity first tier subcontractors who are trustees of a project trust are subject to like obligations as head contractors when administering a project trust account for their subcontract.

Detailed information and guides about the obligations and responsibilities of trustees for a project trust are available on the QBCC website (see - Trust accounts).

The record keeping requirements for project trusts are prescribed in section 10F and section 10G of the Building Industry Fairness (Security of Payment) Regulation 2018. These requirements were substantially amended on 1 July 2024.

Unfortunately, there is currently no compliant software on the market to support the ledger and reconciliation records requirements stated in section 10F of the Regulation. This makes it impossible for members who are trustees for a project trust to comply with their obligations in this section.

Master Builders has made representations to the Queensland Government on behalf of members about this matter.

In response, the administering department for the legislation has released the following statement (dated 11 July 2024) as to its interim expectations from industry regarding compliance with the recording keeping requirements in section 10F.

1. The policy intent behind the amendments at section 10F of the BIF Regulation is to simplify and clarify the record keeping requirements and to ensure alignment to trust accounting principles (as opposed to general accounting) and where required, to apply a more fit for purpose trust accounting framework.
2. The Department is working with IT providers to support the development of compliant software to support. The Department will be assessing software to ensure the required records can be produced, and will publish a list of compliant software. Software is expected to become progressively available from late 2024 and through early 2025.
3. Until the software becomes readily available (e.g. the majority of the available and commonly used accounting software releases trust products), the QBCC has advised they will continue to apply an educative approach in relation to these software issues; and will apply a proportionate or risk based approach in relation to the broader trust account framework and take appropriate regulatory action if and when required and audits will focus on compliance with the trust framework (e.g. that trusts are being opened when required, subcontractors are being paid on time, other records are being kept in accordance with S10G).

4. It is not expected that trustees would be able to produce the required trust records (as per s10F) until the relevant software becomes available.

A trustee can lawfully dissolve a project trust account at a financial institution if:

• there are no longer any subcontractor beneficiaries for the trust; or
• only maintenance work remains to be completed under the contract.