Rules for using a project bank account

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.

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) – refer to the version of the BIF Act that was in place at the time that the contract required a PBA. Read more in the Head contractors guidelines (PDF, 981KB).

The principal will monitor the PBA's use and notify the Queensland Building and Construction Commission (QBCC) of certain discrepancies. 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 up the PBA, 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 30)
  • 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 trust account until they're paid 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 liable to be paid to subcontractors
  • 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. Read more about closing the PBA.

Notification time frames

During the subcontract, the head contractor must:

  • provide copies of all payment instruction information to the principal and relevant subcontractors as soon as practicable after the payment instruction is given to the financial institution
  • tell the principal about any changes to a 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 (for example, due to a contract variation) and establish the PBA within 20 business days when it becomes required
  • if a PBA was not required at the time the subcontract was entered into, tell the subcontractor about the use of a PBA within 10 business days after the PBA becomes required.

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.

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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