COVID-19 alert: Read about eased restrictions for businesses in Greater Brisbane from 1am, Friday 22 January.
Criteria for a project bank account
The Building Industry Fairness (Security of Payment) and Other Legislation Act 2020 received assent on 23 July 2020.
This Act will replace project bank accounts with a new trust account framework, delivering a more streamlined framework. Read about the new trust account framework.
The following information only applies to project bank accounts for certain government contracts tendered after 1 March 2018 up to 28 February 2021.
A head contractor is responsible for determining whether a project bank account (PBA) is needed for a building contract for a project.
This information is a summary of the criteria for deciding whether a project needs a PBA.
For more detail, including a decision tree, read the Head contractors guidelines (PDF, 981KB).
The head contractor needs to apply threshold tests to decide whether to set up a PBA. If the project passes all the tests, they must set it up.
A contract needs a PBA if it's tendered after 1 March 2018, and the Queensland Government is the principal (i.e. departments in Phase 1 and statutory authorities if they opt in).
It must also pass these 3 threshold tests:
- More than 50% of the contract value is for building work.
- The contract value is $1 million–$10 million (including GST).
- At least 1 subcontractor will be engaged under the contract.
If the project contains several different aspects of work, the head contractor must determine how much of the contract price is needed to complete each component.
However, a PBA isn't needed if the head contractor can prove there are fewer than 90 days between the date a PBA would be required and the project's practical completion date.
For more about the threshold tests, read the Head contractors guidelines (PDF, 981KB).
Some projects are exempt from PBAs. You don't need a PBA for:
- civil, engineering and infrastructure projects, such as bridges, roads, tunnels, busways or railways (although some civil and infrastructure projects include building work, as defined by the law, so you need to apply the 'more than 50%' test to decide if you need a PBA)
- a residential construction work contract, unless it's for 3 or more living units with the Department of Housing and Public Works as the principal
- contracts solely for maintenance work that involves ongoing restoration, replacement or work to prevent deterioration of a building or part of a building (excluding building refurbishment and capital improvements)
- Queensland Government contracts advertised or tendered before 1 March 2018.
There are penalties for failing to establish a PBA when required.
Read more about monitoring and compliance.
Suppliers or subcontractors
Before setting up a PBA, a head contractor should also determine whether they have subcontractors or suppliers according to the law.
The definition of a supplier changed during amendments to the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act).
Under section 11 of the Act, a supplier is a party to a contract who both:
- supplies goods and services without also carrying out the work
- doesn't require a licence under a relevant Act to lawfully supply those goods and services.
Some suppliers may also be subcontractors if they're required to hold a licence or other authority to lawfully supply the goods or services. The relevant Acts for these licences/authorities include:
- Building Act 1975
- Electrical Safety Act 2002
- Plumbing and Drainage Act 2002
- Queensland Building and Construction Commission Act 1991.
If a contractor or supplier supplies goods and services for which they must hold a relevant licence, or they also carry out building work, they're a subcontractor under the BIF Act and must be paid through the PBA.
Labour hire companies
A labour hire company is considered a subcontractor for the PBA project (and must be paid through the PBA accounts) if either:
- it is carrying out any building work as defined by the BIF Act
- the type of work it is carrying out requires a licence under the Building Act 1975, Electrical Safety Act 2002, Plumbing and Drainage Act 2002 or Queensland Building and Construction Commission Act 1991.
Sometimes contract variations or amendments during a project can cause a project to require a PBA, even if it didn't need one when it started.
Read about the effect of contract variations on PBAs.