Retention money in project bank accounts

New laws

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.

Retentions for subcontractors

A subcontract can provide for retention money to be withheld from progress payments. The head contractor may retain a percentage of each payment otherwise due to the subcontractor as retention money (i.e. security for performance).

The head contractor must ensure these retention amounts are held only in the project bank account (PBA) retention trust account.

They must transfer retention funds from the general trust account to the retention trust account, with the money clearly identified in the account (e.g. 'Retention – Subcontractor name' or 'Retn – Subcontractor initials').

The head contractor can withdraw funds from the retention trust account only to:

  • pay the subcontractor an amount withheld in connection with the subcontract
  • after the end of the defects liability period for the subcontract
    • to pay for the correction of defects or to secure the performance of a subcontractor
    • to pay another contractor engaged by the head contractor to correct defects or omissions in the subcontracted work if the payment is also made in accordance with the related subcontract
  • make a payment ordered by a court.

Claims for retention money where there is a PBA

The head contractor must notify the subcontractor within 10 business days before the end of the defects liability period (or within 5 business days after receiving notice if the defects liability period is linked to a higher building contract) using the S67NC Notice of end of defect liability period form.

The subcontractor can use this information to make their final payment claim.

The head contractor must release retention monies according to the building contract unless they have a reasonable excuse.

Find more information about responsibilities relating to retentions on the QBCC website.

Read more detail about retention funds in the:


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