given by the document called ‘Standard on assurance engagements ASAE 3100 – compliance engagements’ formulated by the Auditing and Assurance Standards Board under the Australian Securities and Investments Commission Act 2001 (Cth), section 227B(1)(b).
means a requirement, applying to a trustee under chapter 2, in relation to the administration of a trust account.
means a contract that contributes to the performance of the head contract because the work required to be carried out under the subcontract, will form all or part of the work required to be carried out under the other contract, and the contribution is not merely a coincidence e.g. purchase of tools.
If the Retention Trust Account was not opened before the Retention Trust is required, the notice must be given within 5 business days after opening the Retention Trust Account.
George Taylor is a subcontractor to the builder, Smith Builders Pty Ltd. Under the subcontract, Smith Builders Pty Ltd is holding $20,000 in the Retention Trust Account for this subcontract being the amount withheld from payment to George as cash retention for the subcontract.
During the project, George is overpaid and owes a debt of $5,600 to Smith Builders Pty Ltd. George fails to repay the debt and the subcontract includes a clause that allows Smith Builders Pty Ltd to have recourse to the retention money to recover the debt owed. Accordingly, on the day the subcontract allows recourse to recover the debt owed, Smith Builders Pty Ltd gains a beneficial interest in the amount of the debt (i.e. $5,600) in the amount held in the Retention Trust Account, and George has a beneficial interest in $14,400 being the remainder that is held from the subcontract ($20,000 – $5,600 = $14,400).
means the record of deposits and withdrawals from a trust account.
means a reconciliation of transaction entries in the Trust Account Ledger against the bank statement for the Project Trust Account and/or the Retention Trust Account.
means a record that:
NB: Where all amounts due to be paid to a subcontractor beneficiary and/or a head contractor beneficiary have been paid within that month, and no other money is being held for the beneficiaries, the trust account ledger trial balance statement will show nil for all beneficiaries.
for a Project Trust, means that a contract has:
for a Project Trust, means the time at which the first of the following occurs after the Project Trust is required:
Head contract:
Accordingly, a Project Trust was not required prior to 1 January 2022.
However, a variation to the head contract is agreed on 1 February 2022 that increases the scope of work and the contract price. The total revised contract price on 1 February 2022 is now $12M (for this variation and all previous variations i.e. 9% more than the original contract price).
Whilst a Project Trust is technically required on 1 February 2022, it seems that the State may not have intended a Project Trust to be required until the revised contract price reached $14.3M (being 30% more than the original contract price). We recommend that you carefully consider your position in this situation until the legislation is either changed by the State, or the State confirms that the legislation currently reflects its intention.
Head contract:
Accordingly, a Project Trust was not required prior to 1 January 2022.
However, a variation to the head contract is agreed on 13 April 2022 that increases the scope of work and the contract price. The total revised contract price on 13 April 2022 is now $10.8M (for this variation and all previous variations i.e. 35% more than the original contract price).
Therefore, a Project Trust is required on 13 April 2022. This is so even if the State changes the legislation because the contract price has increased by more than 30% so is definitely captured by BIF2.
licensed under parts 11, 12 or 13 of the Queensland Building and Construction Commission Regulation 2018, schedule 2.
| Commencement Date | Principal | Contract Price (excl GST) |
|---|---|---|
| 1 March 2021 | State Government | $1M – $10M |
| All State Authorities (if it opts in) | $1M or more | |
| 1 July 2021 | State Government or Hospital and Health Services | $1M or more |
| Other State Authorities (if it opts in) | $1M or more | |
| 1 January 2022 | State Government or Hospital and Health Services | $1M or more |
| Other State Authorities (if it opts in) | $1M or more | |
| Other State Authorities (mandatory) | $10M or more | |
| Private Entity | $10M or more | |
| 1 April 2025 | State Government or Hospital and Health Services | $1M or more |
| Other State Authorities (if it opts in) | $1M or more | |
| Other State Authorities (mandatory) | $3M or more | |
| Private Entity | $3M or more | |
| 1 October 2025 | State Government or Hospital and Health Services or all State Authorities | $1M or more |
| Private Entity | $1M or more |
means any of the following work if it is to be carried out under a first-tier subcontract for a Project Trust Contract:
Protected Work includes all work that is Project Trust Work but does not include:
The balance of the Project Trust Account is $65,124 on 8 March 2021. On 9 March 2021, the builder is due to pay the electrician $48,200, the plumber $23,100 and the carpenter $14,100. The total amount due on that day is $85,400 which is more than the balance in the bank account. Therefore, the builder must make pro rata payments to each subcontractor as follows:
electrician pro rata payment = 48,200/85,400 x $65,214 = $36,756.17
plumber pro rata payment = 23,100/85,400 x $65,124 = $17,615.51
carpenter pro rata payment = 14,100/85,400 x $65,124 = $10,752.32
Bob the Builder Pty Ltd has a head contract that is a Project Trust Contract under BIF2. Bob the Builder Pty Ltd subcontracts with Tom’s Carpentry Pty Ltd but does not hold cash retention under the carpentry subcontract. However, Tom’s Carpentry Pty Ltd enters into a sub-subcontract with George Smith and retention is withheld from George Smith for the sub-subcontract work. Therefore, Tom’s Carpentry Pty Ltd is required to open a Retention Trust Account for George’s cash retention and to comply with all of the obligations in BIF2 that apply to Retention Trust Accounts.
Smith Builders Pty Ltd enters into a contract with the State for Project Trust Work. The contract price is $800,000 excluding GST (Contract 1). After two weeks of negotiations, the parties agree that Smith Builders Pty Ltd will enter into a separate contract with the State (Contract 2) for additional work that is also Project Trust Work, with a contract price of $400,000 excluding GST. Even though the parties have entered into two separate contracts, if the work was to be carried out on the same or adjacent sites, then a Project Trust would be required for both contracts as the combined value of Contracts 1 and 2 is $1.2M which is more than the current threshold under the Statutory Trust Framework. The only way that the contracts would be excluded is if the parties could prove that Contract 2 was entered into as part of a separate tender process to Contract 1. If that cannot be shown, then the combined value of the two contracts must be used when calculating ‘contract price’ and determining if a Project Trust is required.
The contract price for the head contract with the Department of Education for the construction of a new school building is $1,800,000. Hence, the contract is a Project Trust Contract. However, three months into the project, the parties agree to significantly reduce the scope of work to be carried out under the contract and the revised contract price is $250,000. A Project Trust would not typically apply to a contract of that value, however, as the contract was a Project Trust Contract when it commenced, it is always a Project Trust Contract and the parties are required to continue to comply with the requirements of BIF2 until the contract comes to an end or the Project Trust is lawfully dissolved.
A buyer pays a deposit to a real estate agent for the purchase of a house. The deposit is held in the real estate agent’s trust account until settlement of the sale of the house. On settlement, the balance of the purchase price is paid to the seller and the real estate agent is required to release the deposit to the seller less the agreed fee for the real estate agent. The real estate agent cannot use the money held in trust until authorised to do so by the person who deposited the money into the trust account i.e. buyer. The real estate agent is the trustee and the buyer is the beneficiary until such time as the purchase has been finalised at which point the seller and the real estate agent become the beneficiary for different amounts.
George Smith has completed carpentry works under a first-tier subcontract under a Project Trust – the value of the work completed to date is $53,245 under this subcontract. To date, the builder has only paid George $35,125. However, the due date for payment for the outstanding $18,120 has not yet arisen. Therefore, George does not have any beneficial interest under the Project Trust until the due date for payment has arisen.
A child is left money from its grandparents upon death. Parents hold that money in trust for the benefit of the child (as the child is less than 18 years old so is not yet an adult). A formal trust may be created by the grandparents’ will with associated written documents drawn up, or a different written agreement could provide the parents with the obligation to hold the money in trust for the benefit of the child until the child turns 18 years old.
A buyer pays a deposit to a real estate agent for the purchase of a house. The deposit is held in the real estate agent’s trust account until settlement of the sale of the house. On settlement, the balance of the purchase price is paid to the seller and the real estate agent is required to release the deposit to the seller less the agreed fee for the real estate agent. The real estate agent cannot use the money held in trust until authorised to do so by the person who deposited the money into the trust account i.e. buyer. The real estate agent is the trustee and the buyer is the beneficiary until such time as the purchase has been finalised at which point the seller and the real estate agent become the beneficiary for different amounts.
means a written statement to be given by a head contractor to its client in accordance with the Building Industry Fairness (Security of Payment) Act 2017, section 75(7).
means a subcontractor who is a beneficiary of a Project Trust and/or a Retention Trust.
means a contractor who is engaged by another contractor (e.g. head contractor) to perform work that contributes to the performance of another contract (e.g. head contract) because the work, required to be carried out under the subcontract, will form part of the work required to be carried out under that other contract. However, it does not include work for which the contribution is merely a coincidence e.g. purchase of tools.
means a department of the Queensland State Government e.g. Department of Education, Department of Energy and Public Works, Department of Health but excludes a State Authority.
means:
but does not include an entity prescribed by regulation not to be a State Authority. (There are currently no entities that are prescribed by regulation not to be a State Authority.)
means an appropriately qualified person appointed by the Queensland Building and Construction Commissioner to investigate a person’s compliance with the requirements of Building Industry Fairness (Security of Payment) Act 2017, chapter 2.
means a vehicle that operates on or uses rails, including, for example, a carriage, locomotive, rail car, tram or trolley.
means a trust over cash retention withheld from a subcontractor under a subcontract that falls under a head contract that is a Project Trust Contract.
means a trust over cash retention withheld from a head contractor under a Project Trust Contract.
means a bank account that is held at an approved financial institution for cash retention that is withheld from subcontractor beneficiaries under subcontracts that fall under a head contract that is a Project Trust Contract.
means a bank account that is held at an approved financial institution for cash retention that is withheld from head contractor beneficiaries under head contracts that are Project Trust Contracts.
means a trust over cash retention withheld from a head contractor or a subcontractor in relation to a Project Trust Contract.
means a part of a building designed for separate occupation as a residence.
means the following work if carried out by a licensed contractor and the insurable value of the work is more than $3,300 including GST:
The following work is also residential construction work if carried out for work mentioned above:
for residential construction work:
However, the following things are not a residence:
means
| Who | What relationships |
|---|---|
| Individuals | Members of the same family i.e.
|
| Individual and Corporation | Individual or a member of the individual’s family:
|
| Individual and Trustee of a Trust | Individual or related entity under another provision of this definition is a beneficiary of the trust |
| Corporations | Related bodies corporate under the Corporations Act 2001, section 50 |
| Corporation and Trustee of Trust | Corporation or related entity under another provision of this definition is a beneficiary of the trust |
| Trustees of two or more Trusts | A person is a beneficiary of both trusts, or a person is a beneficiary of one trust and a related entity under another provision of this definition is a beneficiary of the other trust |
A person is also a ‘related entity’ for another person if the person acquires interests in a land holding trust (see Duties Act 2001, schedule 6) and the acquisitions form, evidence, give effect to or arise from what is substantially one agreement.
means any of the following work to be carried out under the Project Trust Contract:
Project Trust Work also includes work prescribed by regulation to be Project Trust Work and does not include work that is prescribed by regulation not to be Project Trust Work.
Currently, the only additional work that has been prescribed by regulation to be Project Trust Work is as follows:
Currently the only work that is prescribed by regulation not to be Project Trust Work is as follows:
means a project that has a head contract that is a Project Trust Contract.
means a head contract between the principal and the head contractor for Project Trust Work if the contract is eligible for a Project Trust, is not an exempted contract, and the head contractor enters into a subcontract for all or part of the contracted work and the subcontract work is Protected Work or is for the provision of Related Services.
means a bank account for the Project Trust that is held at an Approved Financial Institution.
means a trust over particular money that relates to a Project Trust Contract.
includes a separate or distinct parcel of land for which an interest is recorded in a register under the Land Act 1994.
means a company or other entity that is owned by any entity other than the State Government, but does not include a State Authority.
means the client that the Project Trust Work is being carried out for by the head contractor and who is a party to the Project Trust Contract with the head contractor e.g. developer, State Government, State Authority, etc.
for the purposes of determining whether a Project Trust is required, means practical completion as provided for under the contract, or if the contract does not provide for practical completion, when the contracted work would reasonably be estimated to be completed:
means a payment schedule given in accordance with the Building Industry Fairness (Security of Payment) Act 2017, section 76.
means a payment claim given in accordance with the Building Industry Fairness (Security of Payment) Act 2017, section 75.
means an amount prescribed by regulation as the minimum subcontract price for a subcontract under a Project Trust Contract. (There is currently no minimum subcontract price prescribed by regulation.)
means a person who holds a contractor’s licence under the Queensland Building and Construction Commission Act 1991.
the head contractor is liable to pay the subcontractor if any of the following circumstances apply:
for residential construction work, means an amount representing the reasonable cost to the insurer of having the work carried out by a licensed contractor on the basis that all building and other materials are to be supplied by the contractor (whether or not the work is carried out by a licensed contractor on that basis).
means a Hospital and Health Service established under the Hospital and Health Boards Act 2011, section 17.
means a head contractor who is a beneficiary of a Retention Trust for a Project Trust Contract.
means the entity that is contracted to the principal to carry out Project Trust Work.
means the contract between the head contractor and the principal that includes the carrying out of Project Trust Work that is not also a subcontract for another contract e.g. contract between a principal and a builder.
means a subcontractor to the head contractor under a Project Trust Contract.
means a subcontract to the head contract under a Project Trust Contract.
an amount is due to be paid on the due date for the payment. The due date for the payment may be as per the contract and/or as per the Building Industry Fairness (Security of Payment) Act 2017, section 73 if it is in relation to a valid payment claim.
means:
for a contract, means the party to the contract for whom the contracted work is to be carried out.
for a contract, means the work required to be carried out under the contract.
for a contract, means the party to the contract who is required to perform work under the contract, whether by:
means the amount the contracted party is entitled to be paid under the contract (e.g. agreed price for a lump sum contract) or, if no amount is agreed or the amount cannot be accurately calculated, the reasonable estimate of the amount the contracted party is entitled to be paid under the contract. The Contract Price does not include Goods and Services Tax.
in relation to Project Trust Work wholly or partly designed by a person, includes the following:
means security for a contract that is provided in the form of cash withheld from each progress payment made to the contractor (either head contractor or subcontractor).
means a route especially designed and constructed for, and dedicated to, the priority movement of buses for passenger transport, and includes:
for a residence or related roofed building, means the outermost sides of the aggregation of the components of a building that have the primary function of separating the internal part of the residence or related roofed building from the external environment e.g. slab and footings system, an external wall and a roof.
means an amount that a particular beneficiary is entitled to from the Project Trust or Retention Trust, as applicable. It will change from day to day as a beneficiary’s entitlement to money under a contract changes from day to day.
for a resource authority, see Mineral and Energy Resources (Common Provisions) Act 2014, schedule 2.
means a financial institution approved by the Queensland Building and Construction Commissioner.
of a contract, includes any variation of the contract or change in the contract price.
means
means a person appointed under the Building Industry Fairness (Security of Payment) Act 2017, section 81.
means the process for consideration of a valid payment claim by an adjudicator under the Building Industry Fairness (Security of Payment) Act 2017, chapter 3.