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When do I need a Project Trust Account?
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.
Monday, 20th December 2021
Disclaimer: Project trust accounts are complex. This information is general in nature and should not be substituted for legal advice.
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.
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.
Common projects and whether a PTA will be required after full implementation (1 October 2023)
All descriptions below are for a contract price of over $1 million and have subcontractors working on the job:
| Job description | Is a PTA required? | Reason |
| New home construction | No | This is a construction relating to less than 3 living units. A single detached dwelling is 1 living unit. |
| New duplex construction | No | This is a construction relating to less than 3 living units. A duplex is 2 living units. |
| 2 x new homes construction | No | This is a construction relating to less than 3 living units. A single detached dwelling is 1 living unit. |
| Alteration/renovation to home | No | This is building work relating to less than 3 living units. A single detached dwelling is 1 living unit. |
| Alteration/renovation to duplex | No | This is building work relating to less than 3 living units. A duplex is 2 living units. |
| Maintenance work | No | A PTA is not required if only maintenance work is performed under the contract. |
| Bridge construction | No | Construction of a bridge (or any other civil construction work) is not defined as ‘project trust work’ or a ‘building’. |
| Body Corporate work (construction of a free-standing new fence outside the building envelope) | No | A building means a fixed structure that is wholly or partly enclosed by walls or is roofed. A fence (by itself) is not defined as a ‘building’ and the work is outside the ‘building envelope’. |
| Body Corporate work (exterior painting of 3 or more buildings) | Yes | This is project trust work on a building that is more than 3 living units. None of the exemptions apply. |
| Body Corporate work (re-roofing and guttering of 3 or more buildings) | Yes | This is project trust work on a building that is more than 3 living units. None of the exemptions apply. |
| Body Corporate work (3 x renovations to units in a high rise) | Yes | This is a residential construction project that relates to 3 or more living units. |
| New duplex + new home construction | Yes | This is a residential construction project that relates to 3 living units. |
| Residential apartment tower | Yes | This is a residential construction project that relates to 3 or more living units. The exemption for PTA’s based on the number of living units does not apply. |
| 3 x new townhouses | Yes | This is a residential construction project that relates to 3 or more living units. |
| Commercial premises/shop fitouts | Yes | A commercial premises is considered ‘project trust work’ because it includes work on a fixed structure that is wholly or partly enclosed by walls or is roofed. |
| School construction/refurbishment | Yes | A school is considered ‘project trust work’ because it includes work on a fixed structure that is wholly or partly enclosed by walls or is roofed. |
| Speculative building work | ||
| Company A owns the land and is a building company that constructs townhouse projects. Company A sells the completed projects after they have been constructed. Company A engages subcontractors to complete the building work. | No | Company A does not have to establish a PTA. Company A is carrying out speculative work and has no ‘eligible contract’ for a PTA. |
|
Company A owns the land and is a building company that constructs townhouse projects. Company A sells the completed projects after they have been constructed. Company A engages subcontractors to complete the building work.
Company B is a carpentry trade contractor. Company B wins the carpentry work by Company A on the townhouses. Company B engages subcontractors themselves to do some of the work. |
Yes
|
Company B will have to establish a PTA.
Company A will become the principal and will need to pay into the PTA. Company B will have to pay their subcontractors from the PTA. Any subcontractors engaged by Company B will need to be paid under the PTA model. |
| Company A owns the land. Company C has a building licence. Both companies are related (they have the same director and postal address). Company C constructs the townhouses. There is no written contract and no money goes from Company A to Company C for the construction of the projects. Company A sells the completed projects after they have been constructed. Company C engages subcontractors to complete the building work. | No | Company C does not have to establish a PTA because there is no ‘eligible contract’ between Company A and Company C. |
Further information
This Information Sheet 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 email HIA's Contracts and Compliance team or seek independent legal advice.
To find out more, contact HIA's Contracts and Compliance team
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