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Rules for using a project bank account

The head contractor must follow strict rules when using a project bank account (PBA) to ensure it meets all legal obligations and protects subcontractors' payments.

They should become familiar with the penalties for non-compliance of the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act). Read more in the Head contractors guidelines (PDF, 981KB).

The principal will monitor its use and notify the Queensland Building and Construction Commission (QBCC) of any discrepancies or non-compliance. Read more in the Principals guidelines (PDF, 1.1MB).

Subcontractors should always check they're being paid correctly from a PBA (if it's required under the contract) and the correct amounts. Contact QBCC with any concerns. Read more in the Subcontractors guidelines (PDF, 973KB).

General rules for head contractors

In general, the head contractor must:

  • determine if a contract needs a PBA, set it up, operate it according to the law and dissolve it when required
  • pay all subcontractor beneficiaries from the PBA via electronic transfer (and no other means)
  • immediately cover any shortfall if there are insufficient funds by depositing the shortfall amount into the relevant account (BIF Act, section 33)
  • use a payment instruction to instruct the financial institution how much to pay out and when
  • send payment instruction information to the principal and subcontractors as soon as possible after giving the payment instruction to the bank
  • transfer and maintain subcontractors' retention monies in the retention funds trust account until they're transferred back to the subcontractor at the end of the defects liability period
  • transfer and maintain any disputed amounts in the disputed funds trust account until the dispute is resolved or the subcontractor decides not to progress to dispute resolution (within 60 days).

The head contractor can't:

  • transfer amounts or payments into or out of the PBA for any purpose other than paying beneficiaries
  • withdraw an amount from a trust account to pay themselves unless enough funds will remain after the withdrawal to pay all amounts due to subcontractors at the time (when the payment schedule is issued)
  • directly pay suppliers from the PBA unless they're considered subcontractors under the BIF Act
  • use amounts that have been paid, or are required to be paid, into a trust account for payment of the head contractors' debts or taken in execution under a court order for the benefit of a head contractor's creditors
  • invest amounts held in a trust account for the PBA in any form of investment (except for interest earned on the accounts)
  • dissolve the PBA while subcontractor beneficiaries remain in the PBA. They must give the principal evidence of compliance at least 5 business days before closure. Read more about closing the PBA.

Notification time frames

During the subcontract, the head contractor must:

  • provide copies of all payment instructions to the principal and relevant subcontractor within 3 business days of providing them to the financial institution
  • tell the principal about any changes to the subcontractor's information with 5 days of being notified using the S50 principal to be given information about subcontracts (PDF, 718KB)
  • notify the QBCC, principal and subcontractor if a previously exempt project requires a PBA due to contract variations or amendment and establish the PBA within 20 business days of the agreed amendment or variation
  • tell the subcontractor about a change in project status (to a PBA project) within 10 business days of the agreed amendment or variation.

Costs and interest

The head contractor is responsible for the costs of administrating the PBA.

They also get the interest earned on money held in the PBA. They may withdraw an amount equal to the interest earned by PBA trust accounts every 12 months or when they dissolve the PBA.

Record keeping

The head contractor must keep written records of all transactions into, between and out of the PBA's 3 trust accounts.

These records must:

  • sufficiently explain every transaction
  • provide a true position in relation to the outcome of the transactions
  • enable accurate accounts to be prepared when required
  • enable convenient and proper audit of the transactions.

The records must be in English and kept for 7 years.


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