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$vuetify.icons.faPhone1300 650 620

Trust records for project and retention trust accounts

A project trust account (‘PTA’) is a trust account where money is paid and held in trust for subcontractors and head contractors until payments are due during a building project.

Disclaimer: Project trust accounts are complex. This information is general in nature and should not be substituted for legal advice.

A trust account is a legal arrangement through which money is held by a third party, for example a bank, for the benefit of another party such as a subcontractor or head contractor. Payments from trust accounts can only be made to certain parties under specified circumstances. 

There are two types of trust accounts that may apply; a project trust account (for each project) and a retention trust account (‘RTA’) (for all cash retention held by the principal or head contractor on any projects). These must be opened with a financial institution approved by the Queensland Building and Construction Commission (QBCC). 

If applicable, a head contractor will be required to set up a PTA for every construction project they are contracted to carry out. 

The majority of HIA members carrying out residential construction work, including renovations/alterations for homeowners, will not be caught by these requirements. However, if you build residential townhouses or multi-unit developments you will need to be aware of the PTA requirements. 

Terminology 

  • Account review report: A report stating that, based on a review of the administration of the account, it is the auditor’s opinion that the trustee has complied with all the requirements of the legislation for the period to which the report relates
  • Trustee: The party who is operating the trust. Generally, this will be the head contractor, but it could also be the principal for retention trust accounts
  • Trust account ledger: The record keeping required for all transactions in and out of a trust account. The trust account ledger must be capable of providing separate information for each beneficiary of the project trust or retention trust
  • Trust account ledger trial balance statement: A record that states the month to which it relates and date it was prepared, lists the name of each beneficiary for whom money is held in trust in the account at the end of the month, and shows the total of the balances for each beneficiary at the end of the month 

What you need to know when managing a trust account

  • You must cover any shortfalls if there is an insufficient amount available in a trust account to pay an amount due
  • You cannot use money in the trust account to pay your debts
  • You cannot use money in the trust account to pay for the administration of the trust or fees to be paid to the bank for establishment/running of the trust
  • You are entitled to the interest earned on amounts held in the trust account
  • You are liable for all acts and defaults of an agent as if the acts and defaults were the trustee’s own. The costs of employing or engaging the agent are not recoverable from funds held in trust for the project trust or retention trust or from any beneficiary of the trust, other than the trustee
  • You may delegate any powers of the trustee to another person relating to the trust, other than this power to delegate
  • You may apply to the Supreme Court for directions about an amount held in trust, or the administration of the trust, or the exercise of a power by the trustee. 

Trust records

The trustee for a project trust or retention trust must keep records for the trust as required, including:

  • An individual trust account ledger for the trust
  • A copy of each contract and related documents for which the trust is required, including all payment claims and all payment schedules, variations, or amendments to any of the contracts
  • All financial statements for the trust account
  • All bank reconciliations prepared under the legislation (see further details below)
  • All trust account ledger trial balance statements for the trust account, including all information used to prepare the statements
  • The record of deposits and withdrawals for the trust account as well as any notices about such transactions
  • Records of changes to any of the following records for the trust account and the reasons for the changes, including correction of errors and inclusion of additional information:
    • A trust account ledger
    • A trust account ledger trial balance statement
    • A record of deposits and withdrawals and
    • A bank reconciliation
  • Copies of account review reports that have been completed for the trust
  • Records of the completion of retention trust training and
  • If any abbreviations or codes are used in a trust record, a document that explains these in plain English.

The trust records must:

  • Be an accurate record of the transactions affecting the trust account;
  • Enable convenient and proper audit of the transactions affecting the trust account and
  • Be kept in the way and include the following information:
    • All transactions affecting the trust account must be recorded in the trust account ledger, be listed in chronological order of the date the transaction occurred, and be recorded in the ledger within five business days after occurring
    • A trust account ledger trial balance statement for the trust account must be prepared within 15 business days after the end of each month
    • The following information must be recoded for each transaction recorded in the trust account ledger for the trust account:
      • The date of the transaction
      • The transaction number
      • The amount of the transaction
      • Details of each beneficiary to whom the transaction relates and the amount to which each beneficiary is entitled for the transaction
      • The reason for the transaction and
      • The balance of the amount held in trust for each beneficiary after each transaction. 
    • The record of deposits and withdrawals for the trust account must be a consolidated record that lists the transactions in chronological order of the date the transactions occurred. Specific detail of what the record of deposits and withdrawals for the trust account must include can be found in 'How do payments work with Project Trust Accounts?'
  • Be retained for a period of not less than 7 years.

Any computer system used to store the trust records must:

  • Be capable of producing a report about the details of the transactions for a particular trust account for particular periods and the details of the transactions for a particular beneficiary; and
  • Not be capable of deleting all or any part of a record of deposits and withdrawals for the trust account or the trust account ledger. 

Monthly bank reconciliations

  • The trustee for a project trust or retention trust must complete a bank reconciliation for the trust account within 15 business days after the end of each month
  • The purpose of the bank reconciliation is to reconcile the financial institution statement for the trust account with the record of deposits and withdrawals for the trust account, and the record of deposits and withdrawals for the trust account with the trust account ledger trial balance statement
  • The bank reconciliation must include the following information:
    • The balance of the trust account at the end of the month as shown on the financial institution statement for the account
    • The amount of each outstanding transaction for the financial institution statement for the trust account for the month, including deposits and withdrawals recorded for the account that are not represented in the financial institution statement
    • The balance of the trust account at the start of the month
    • The balance of all deposits for the month
    • The balance of all withdrawals for the month
    • The balance of the trust account at the end of the month
    • The amount of each outstanding transaction for the record of deposits and withdrawals for the trust account for the month, including deposits and withdrawals shown in the financial institution statement for the account but not recorded as at the end of the month.
  • The trustee must reconcile the balance of the trust account at the end of the month, as shown in the record of deposits and withdrawals for the account, with the amount worked out by adding the balance of deposits and deducting the relevant withdrawals and
  • The trustee must reconcile the balance of the trust account at the end of the month with the total balance held on behalf of beneficiaries as shown in the trust account ledger trial balance statement for the same month. 

Monthly bank reconciliations

  • Only retention trust accounts are required to be audited on a regular basis
  • The trustee for a retention trust must engage an auditor to carry out a review of the trust account annually and if the account is closed
  • The review must be started within 20 business days after the review period ends or after the account is closed
  • The review must be completed within 40 business days after starting the review
  • The review period for a review carried out annually is:
    • For the first review of the retention trust account – 12 months starting on the day the account was opened or
    • For a later review of the retention trust account – 12 months starting on the day after the last review period ended
    • For example, a PTA that is opened on 1 January 2022 has a review period ending on 1 January 2023. Within 20 business days of 1 January 2023 the review must start. The review must be completed within 40 business days of starting. 
  • The review must be carried out by a registered company auditor that is independent of the trustee and has not been excluded by the QBCC. A registered company auditor is independent of the trustee if the auditor is not any of the following:
    • An employee of the trustee
    • If the trustee is a company – an executive officer, investor, or shareholder of the company
    • If the trustee is a partnership – a partner in the partnership or
    • A related entity for the trustee.
  • The trustee does not need to engage a registered company auditor to carry out a review of the trust account if a retention amount was not held in the account during the review period and within 10 business days after the end of the review period the trustee gave the Commissioner a written statement, using an approved way, as to why the trustee did not engage an auditor to carry out the review.
  • Account review report:

    • The auditor must prepare and give to the trustee an account review report for the account
    • An account review report for a trust account is a report certifying that, based on a review of the administration of the account, it is the auditor’s opinion that the trustee has complied with all the requirements during the period to which the report relates. The report must include a number of details including details of any irregularities identified or non-compliance with the trust account provisions
    • The auditor must give the QBCC a copy of the account review report within 20 business days after completing the relevant review
    • The trustee must provide the auditor with all trust records requested by the auditor as soon as practicable
    • If the auditor reasonably believes any of the following circumstances apply, the auditor must notify the QBCC of the belief within five business days:
      • The auditor cannot report that a trust account has been kept in compliance with the Act
      • The auditor finds an irregularity relating to a trust account
      • The auditor suspects the trustee has not met the trustee’s obligations under the Ac or
      • The auditor suspects a contravention of the Act, prescribed by regulation, has occurred. 

    QBCC powers:

    • QBCC have substantial powers to regulate trust accounts, including auditing, issuing directions affecting trust accounts, appointing special investigators, and much more. 

    Further information

    This article is part of a series on the operation of the PTA’s aimed at assisting HIA members understand the requirements. Further information in the series is listed in "What to read next".

    If in any doubt about whether a PTA applies, please call HIA Workplace Services on 1300 650 620 or seek independent legal advice. 

To find out more, contact HIA's Workplace Services team

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