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What is a Project Trust Account?
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 (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).
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
- Contracted party: The party to the contract who is required to perform work under the contract. For example, a subcontractor who is contracted by a builder to perform work would be the ‘contracted party’
- Contracting party: The party to the contract for whom the contracted work is to be carried out. For example, a builder who contracts for a subcontractor to perform work would be the ‘contracting party.’ Similarly, a developer who contracts for a builder to perform building work would be the ‘contracting party’
- 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
- Project trust work: The erection or construction of a building or the renovation, alteration, extension, improvement, or repair of a building amongst other matters. A ‘building’ means a fixed structure that is whole or partly enclosed by walls or is roofed. (Civil construction or engineering work such as roads, bridges, or tunnels is generally not defined as project trust work).
What type of construction projects require a PTA?
A PTA will be required for each eligible contract where more than 50% of the contract price is for ‘project trust work’ and the contract price is $1 million or more (exclusive of GST).
If the parties have multiple contracts that could be the subject of one contract then they will be considered the one contract. This does not apply to separate contracts entered into as a result of separate tender processes.
Exclusions
A PTA will not be required for a contract (irrespective of dollar value) that is:
- Residential construction work relating to less than three living units. For example:
- 1 living unit = single detached dwelling or a residential unit
- 2 living units = a duplex
- Less than 90 days from commencement to practical completion
- Solely for maintenance work. ‘Maintenance work’ means work required on an ongoing basis to prevent deterioration or failure of a thing or to restore a thing to its correct operating specifications or replace a component at the end of its working life; and/or
- Only for professional design, advisory, or contract administration work.
Phased implementation
PTA’s are being gradually implemented as per the below table:
| Phase | Applies to |
| 1 March 2021 | Eligible State Government contracts valued between $1M and $10M (exclusive of GST). Where the contract was entered into because of a tender process, the requirement applies if the tender process was started on or after 1 March 2021 |
| 1 July 2021 | Eligible State Government and hospital and health services contracts valued at $1M or more (exclusive of GST). Where the contract was entered into because of a tender process, the requirement applies if the tender process was started on or after 1 July 2021 |
| 1 January 2022 | Eligible private sector, Local Government, statutory authorities, and government owned corporations’ contracts entered into from 1 January 2022 and valued at $10M or more (exclusive of GST) |
| 1 March 2025 | Eligible private sector, Local Government, statutory authorities, and government own corporations’ contracts entered into from 1 March 2025 and valued at $3M or more (exclusive of GST) |
| 1 October 2025 | All eligible contracts entered into from 1 October 2025 valued at $1M or more (exclusive of GST). This is considered full implementation. |
See Information Sheet 3 for retention trust accounts and when they apply.
When must the PTA be established?
The trust account must be established within 20 business days after the first subcontract is entered into for the PTA project. There must not be more than one PTA for the project trust. A provision of a contract that provides that the PTA must be opened less than 20 business days after the contract is entered into is of no effect.
If a PTA project arises due to an amendment to an existing non-PTA contract (i.e., a variation to the building contract makes the contract eligible) then the PTA must be opened within 20 business days after the day the contract is amended.
A PTA can only be opened by an approved financial institution. More information on approved financial institutions. A trustee must ensure the PTA is held under a name that includes the trustee’s name and the word ‘trust’. A trustee must ensure that deposits of amounts to, and withdrawals of amounts from, the project trust account are made using only methods that create an electronic record of the transfer.
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 Contracts and Compliance team
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