QBCC TRUST ACCOUNTS
As we are sure you would have seen on the news overnight, the Federal Government is proposing major changes to larger If you are in the building business and have a QBCC licence you will have seen correspondence from the QBCC regarding the staged introduction of the latest change: Project Trust Accounts for managing payments to subcontractors.
Project trust accounts cover amounts paid by the principal/developer to the head contractor (usually the trustee of the account). The head contractor then pays all subcontractors engaged on the building project from the trust account. Once all other subcontractors are paid, the head contractors then pays themselves from the same trust account. These project trust accounts are a separate bank account from the head contractor’s main trading account. Importantly suppliers, wages and other operating costs are not to be paid from the project trust account – these come directly from the builders main trading account.
The QBCC rollout timeline visually looks as follows. Clearly the phase-in of lower thresholds for private work will impact a large number of builders. April 1 equals $3m projects and then on October 1 even contracts from $1m will require trust accounts:
There is no question that this further complicates the operation and management of relevant projects. Depending on how many projects your company is involved in at any one time, there could be several trust accounts open and requiring management. The subcontractors must be paid before the head building company and therefore cash flow for wages and suppliers will be challenged. The QBCC is not apologetic about this.
QBCC are mandating training for the licenced company director, nominees and bookkeeper and can be found here: https://www.qbcc.qld.gov.au/running-business/trust-accounts/retention-trust-training
This is a confusing and complex issue for builders. Please find time to read the overview issued by the QBCC and consider the impact on your business before thew phases come into effect. We note that the Master Builders QLD also have a good overview and resource available to assist (https://www.mbqld.com.au/services-and-advice/contracts-and-disputes/project-trust-accounts)For any further assistance or advice, please do not hesitate to contact our office on 07 5531 1288.