Complying with the Expanding Project Trust Account Framework in Queensland
The Expanding Project Trust Account Framework in Queensland will provide an added level of security for payment to smaller construction companies. As of 1 January 2023, most construction industry payments will be made via a trust account. However, the new scheme will also add more administrative and financial burdens and penalties for non-compliance. Thus, document management software will be needed to adjust to the said upcoming changes.
The new legislation aims to protect both contractors and clients. But it will introduce costs that may make some construction companies shy away from the new regime. The best advice to avoid a financial slap is to familiarize yourself with the new regulations. Listed below are some of the main changes.
First, the new rules will change the laws governing establishing project bank accounts in Queensland. Previously, project bank accounts were only required for projects involving State Government funding and secured subcontractor payments. However, the changes made to the BIF Act will simplify the requirements for project bank accounts. This change will eventually impact all construction and building contracts worth AUD 1 million.
While other Australian states have considered or trialed a statutory trust system, Queensland is the first to commit to a complete legislative reform. Before the new legislation goes into effect, industry players must understand when the PTA framework will take effect. The critical date for implementing the new legislation is 31 January 2019. To take advantage of the new law, contractors should contact a Project Trust Accounts company to learn more about the benefits of PTAs for their projects.
Expanding the Project Trust Account Framework will make it easier for contractors to manage their financial risks. The new project and retention trust accounts will protect the payments to contractors and reduce the administrative burden on head contractors. The new legislation will also give the QBCC more oversight over using the trust account framework. The agency will be able to freeze trust account payments and appoint a special investigator to investigate fraudulent activity.
It will also introduce additional oversight powers for contractors and head contractors, like the need for building industry software. The Queensland Building and Construction Commission will be responsible for enforcing PTA compliance. The Queensland Government intends to implement the PTA system in four stages, with each phase expanding the requirements. Commercial and residential projects with three or more living units will be affected. However, small-scale residential work will remain exempt from the project trust account framework. This legislation will also apply to all subcontractors.
If you want to know easily how to comply with the expanding project trust account framework in Queensland, you can read this insightful infographic from Bizprac.