Payment instructions for project bank accounts
On 1 March 2021, project bank accounts were replaced with a new streamlined trust account framework. Read about the new trust account framework.
The following information only applies to project bank accounts for certain government contracts with tenders released between 1 March 2018 and 28 February 2021.
When a building contract requires a project bank account (PBA), all subcontractors must be paid only from the PBA.
A head contractor must make all payments and withdrawals from a PBA trust account using a payment instruction. They can't pay subcontractors in cash, or by BPAY or standard electronic funds transfer.
A payment instruction tells the bank how much to pay to beneficiaries of the PBA trust account (i.e. subcontractors and the head contractor) and when to make the payment.
This information is a summary of the process for using payment instructions. For more details, read the Head contractors guidelines (PDF, 981KB).
Using a payment instruction
The head contractor must use a payment instruction to:
- pay amounts owing to subcontractor beneficiaries from the general, retention or disputed funds trust accounts
- withdraw funds from the PBA trust accounts for amounts owing to the head contractor
- transfer amounts from the general trust account to the retention or disputed funds trust account; and return amounts from those accounts back into the general trust account
- withdraw an amount equal to the interest earned by the trust accounts (only once every 12 months or when the PBA accounts are closed).
Payment instructions can be used to make payments to multiple beneficiaries at the same time (i.e. batch payments). For example, a single payment instruction can be used to:
- pay all subcontractors
- transfer amounts into the retention trust account
- pay the head contractors.
Most accounting software packages can generate payment instructions, including MYOB and QuickBooks.
Most financial institutions enable a payment instruction to be created manually on their online banking platforms. Depending on the financial institution, payment instructions may be called ABA files, Cemtext files, BECS files, payment files, direct entry (DE) files or pay anyone files.
Notifying subcontractors and principal
After giving a payment instruction to the financial institution, the head contractor must give the principal and relevant subcontractor a copy of the payment instruction information as soon as practicable.
This is required for every payment, withdrawal or transfer.
The payment instruction information is only an excerpt of the payment instruction, with relevant information for the principal and subcontractor.
For the principal, the payment instruction information contains the:
- name of payee
- name of payee's account
- name of payee's bank
- payee's bank account details – BSB and account number
- amount to be paid (including amounts paid to retention or disputed funds accounts)
- date paid or to be paid.
For the subcontractor, the payment instruction information contains the:
- name of subcontractor's account
- name of subcontractor's bank
- subcontractor's bank account details – BSB and account number
- amount to be paid (including amounts paid to retention or disputed funds accounts to be held on the subcontractor's behalf)
- date paid or to be paid.
The head contractor can provide the payment instruction information in any written format that best suits their accounting practices and business systems. For example, a remittance advice may be enough for the subcontractor if it includes all the required information.
Checking for errors
The subcontractor should check their copy of the payment instruction information for errors, including:
- the bank account details and account name
- the amount paid to ensure it matches the payment schedule (or, if no payment schedule is provided, confirm it equals the amount claimed)
- your bank account records to confirm the amount stated has been paid to your account
- any retention amounts to ensure they've been paid into the PBA's retention account in line with the subcontract.
If they find any errors, they should contact the head contractor to ask for an explanation. If they can't explain the error, report the matter to the Queensland Building and Construction Commission (QBCC).
The head contractor should notify the subcontractor immediately and in writing if any amounts relevant to the subcontract are transferred to the disputed funds account. The subcontractor should discuss the disputed amount with the head contractor.
Subcontractors should keep a record of the payment instruction information the same way they keep a record of the payment schedules they receive.
Read more about subcontractor obligations in the Subcontractors guidelines (PDF, 973KB).
If the principal identifies any discrepancies between the payment instruction information and the transactions in the PBA and the subcontractor's account details they must report any discrepancies to the QBCC.
Read more about the principal's obligations in the Principals guidelines (PDF, 1.1MB).