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What is happening?

As most in the construction industry will now be aware, the Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIF Act) was amended by the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Qld) (BIFOLA).

One of the most notable amendments the BIFOLA made to the BIF Act was the introduction of the new project trust account framework, which replaced the original project bank account framework.

The next phase of this legislative reform program has now come into effect.

Why do you need to read this?

Before 1 January 2022, the new trust account framework only applied to certain government and hospital and health services contract. Now however, the latest phase of the roll out widens the net significantly so that the new rules now also capture entities operating in the private sector of the construction industry.

It is important for those who are captured by this new phase to understand the strict requirements set out in the legislation, what immediate actions need to be taken within their business to prepare for this new phase, and the consequences (and penalties) for failing to do so.

What are the relevant phases?

The relevant phases are displayed on the Queensland Building and Construction Commission (QBCC) website and are summarised below:



1 March 2021 

Applies to eligible state government contracts valued between $1 million and $10 million (excluding GST), which were “tendered” from 1 March 2021.

1 July 2021 

Applies to eligible government and Hospital and Health Services contracts valued at $1 million or more (excluding GST), which were “tendered” from 1 July 2021.

1 January 2022 

Applies to the eligible private sector (see eligibility criteria below), local government, statutory authorities’ and government-owned corporations contracts valued at $10 million or more (excluding GST) and executed on or after 1 January 2022.

1 July 2022 

Applies to eligible private sector, local government, statutory authorities’ and government-owned corporations contracts valued at $3 million or more (excluding GST) and executed on or after 1 July 2022.

1 January 2023 

All eligible building and construction contracts valued at $1 million or more (excluding GST) and executed on or after 1 January 2023 and subcontractors working on project trust account projects that hold cash retentions, will also need a retention trust account. 


The phases will, once completed, radically change the way payments are made on most construction projects in Queensland. 

Note that from 1 January 2022, the relevant rollout phase that applies to your contract is determined by reference to when the contract was entered into i.e. the date of execution of the head contract.  We think this will probably include eligible contracts that are novated after the relevant date.

Project trust accounts and eligibility criteria

If certain conditions are met, two types of trust accounts will need to be established by a head contractor on a relevant project:

  • 1x project trust account per project; and

  • if applicable, 1 x retention trust account, which can be used across multiple projects and subcontracts.

These trust accounts will need to be opened with an approved financial institution. The financial institutions currently approved for these accounts are published by the QBCC on this page of its website.   

Project trust account: This will be required where:

  1. The head contract meets the requirements set out in the “Relevant Phases” (see above).
  2. More than 50% of the head contract price is for “project trust work”, which:
    • is defined at section 8A of the BIF Act and includes (in summary) construction work relating to a building, site work, specialist work, inspections and other related works, and
    • does not include the construction, maintenance or repair of a busway, road or railway, or a tunnel for a busway, road or railway, or an authorised activity for a resource authority (s 5 of the Building Industry Fairness (Security of Payment) Regulation 2018 (Qld)).
    • It is important to note that, although there is much cross over, “project trust work” has a different definition to “construction work”, which is also defined within the BIF Act (at s 65) and is relevant to payment claims.
  3. There is at least one subcontractor engaged for all or part of the work.

However, a project trust account is not required where the only contracting parties are the State and a state authority.

Retention trust account: This will be required for the head contract where:

  1. A project trust account is required on a project (see above criteria).
  2. The retention amounts are withheld under a head contract or a first-tier subcontract (s 32).
  3. Retention amounts are being withheld in the form of cash.

Because the new rules apply to “cash” retentions (s 31), bank guarantees, insurance bonds and other non-cash securities are not relevant to these retention trust accounts.  This means a retention trust account may not be necessary if your business only accepts bank guarantees or insurance bonds as security.

The State, the Commonwealth, a state authority, a local government, or another entity prescribed by regulation are not required to establish a retention trust account.

Penalties for non-compliance

The BIF Act sets out specific requirements for setting up, managing and making payments from these trust accounts. It also sets out penalties for failing to do so. For example:

  • Section 18: failure to open a project trust account at a financial institution in accordance with this section (including timeframes, type of account, ensuring only 1 account etc.) – 500 penalty units.

  • Section 34: failure to set up a retention trust at a financial institution prior to withholding the retention amount from payment – 500 penalty units.

  • Sections 18A (1) & 34A (1): failure to ensure the trust accounts are held at an approved financial institution – 200 penalty units.

  • Sections 18A (2) & 34A (2): failure to ensure the trust accounts are held under a name that includes the trustee’s name and the word “trust” – 200 penalty units.

  • Sections 18A (3) & 34A (3): failure to ensure the deposits to and withdrawals from the trust accounts are made only using methods which create an electronic record – 500 penalty units.

  • Section 18B & 34B: failure to provide notice to certain parties (with the required information) within 5 business days of opening, changing the name, closing or transferring the trust account – 200 penalty units.

  • Section 52: failing to keep trust records in accordance with the requirements in this section (including currency, language, provision of certain information, timeframes, etc) – 300 penalty units or 1 year’s imprisonment.

These rules are in force now and bearing in mind that a penalty unit is now $137.85, these fines can mount up quickly.  It is therefore very important to ensure your business is sufficiently prepared to comply with these rules.

What do you need to do?

You should already know if you are captured by the project trust account rules or are likely to be in later stages of the legislation’s phased roll out.  The QBCC has developed a useful project trust account tool available online to help parties determine whether they need a project trust account, but you might still need legal advice if you remain in any doubt.

If you have not already done so, you should also implement processes urgently to comply with the new rules.  At minimum, you might consider the following:

  • Contractors should:
    • Contact an approved financial institution to identify an appropriate package to establish project trust accounts and retention trust accounts.
    • Review your upcoming tenders and contract renewals to identify where you might have to meet the BIF Act’s requirements.
    • Carefully check the trust account provisions in all new contracts to ensure that the system you implement meets the relevant contract requirements.
    • Educate your finance teams to comply with the rules, because they are extensive, and penalties apply if they rules are not met.
  • Principals should:
    • Educate their finance team, as all payments for eligible contracts must now be paid into the project trust account (s 19).
    • If you usually work on the basis of template contracts, these might need to be amended to cater for the project trust account rules.
    • While most of the new obligations fall on the contractor, the principal also has obligations. For example, there is a positive obligation on principals (s 24A, which includes penalties) to report to the Commissioner if they know or ought reasonably to know that a project trust account is required and has not been set up.
  • Contractors and Principals should:
    • Consider how your financial and project management procedures may need to be adapted to ensure compliance. For example: do you need to retain additional staff to cope with the administrative burden? Are your IT systems sufficiently able to deal with the record keeping and reporting processes, or do they need to be upgraded?
    • Speak with your financial team in relation to the costs of setting up relevant trust accounts, including perhaps employing additional staff or upgrading any IT systems to manage them. These costs might need to be factored into tendered prices for future contracts.

If we can help you with preparing or implementing systems for this new phase of the rollout, please contact Suzy Cairney of our construction team at


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