The Queensland Government has recently announced a two-year extension of the rollout of the new Project Trust Account Framework for the Queensland Building and Construction Industry after recognizing the administrative burden for contractors due to new software being required.
What are the trust account changes?
The new model was introduced under the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act (BIFOLA). Project Bank Accounts were replaced with a new Trust Account framework.
Trust Account changes to the Building and Construction Industry were introduced to provide greater protection to vulnerable parties in construction contracts by strengthening the security of payments to subcontractors, who are generally at the end of the contractual supply chain. This of course impacts how head contractors operate.
The changes require the creation of a project trust account, through which progress payments are received and paid, for each eligible contract. A retention trust account is also required, where eligible cash retention amounts are withheld until they are due to be paid.
Previously, the rollout was set to extend to eligible private sector and local government, statutory authorities’ and government-owned corporations’ contracts valued between $3 million to $10 million on 1 April 2023. The final stage of the rollout, for contracts valued greater than $1 million, was also due to commence on 1 October 2023.
What are the changes to the rollout?
Due to ongoing challenges within the construction industry, including supply chain issues, labour shortages and cost pressures, the commencement of the later stages of the rollout have now been extended.
For eligible contracts valued between $3 million and $10 million, the changes will now only apply to contracts executed after 1 March 2025. For eligible contracts valued at $1 million and above, the date for commencement of the trust account framework, and the date after which the change will apply, has been extended to 1 October 2025.
There have been no changes for eligible contracts with a value above $10 million, or contracts valued over $1 million for State Government Hospital and Health Services, as the Trust Account requirements for these classes were already in effect.
How does this impact you?
For contracts that would have been subject to the additional trust account requirements if not for the extension, the position is effectively the status quo. The changes in the commencement dates have been effected to give eligible businesses, as well as technology partners, more time to prepare for the transition.
If you have any questions about the requirements for you, or the impact of these changes on your business, please don’t hesitate to contact Kathryn Te’o, Special Counsel at GRT Lawyers.
