Opening & managing project trust accounts

Act establishes a project trust

The contracted party to an eligible contract becomes the trustee of the project trust once the trust is taken to be ‘established’ under the Act. This is important as a trustee’s obligations commence from the point of ‘establishment’, regardless of whether a project trust account has actually yet been opened. The trustee has special responsibilities for the administration of the project trust. These responsibilities are stipulated by law.

The project trust is established when the first of the following events occurs:

  • the contracting party pays the contracted party an amount under the contract
  • the contracted party pays a subcontractor beneficiary for subcontracted work under the contract
  • a deposit is required by law into the project trust account.

The contracted party/trustee has 20 business days after they enter into the first subcontract to open a project trust account.

How to open a project trust account?

If a project trust is required for a contract, the trustee must ensure a project trust account is opened. For each eligible contract, only one project trust account must be held.

A project trust account must be opened at an approved financial institution and the account cannot be a virtual or subordinate account. An approved financial institution is a financial institution approved by the QBCC for keeping trust accounts.  See QBCC website for details.

A list of all approved financial institutions is published on QBCC’s website. When opening the project trust account, the trustee must ensure the account name includes the trustee’s name and the word ‘trust’.

Dissolving a public trust account
When can a project trust be dissolved?

The trustee can lawfully dissolve the trust only if:

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

The project trust account can be closed without the above requirements being met but only for the purpose of transferring the account to another financial institution in accordance with the requirements explained above. This is not taken to be dissolving the project trust.

How to dissolve a project trust?

The project trust is dissolved by:

  • closing the project trust account, and
  • giving a written notice to QBCC.

When dissolving the project trust, the trustee may pay itself:

  • any interest earned on amounts held in the project trust account (unless the withdrawal would prevent the full payment of another amount that must be paid from the account)
  • any remaining amount in the account that is not owing to a subcontractor beneficiary.

It is the responsibility of the trustee to ensure it gives a notice providing details about the closure of the project trust account to contracting party and to QBCC within 5 business days of closing the account.  For further information see the QBCC website.

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