The Queensland Government has deferred the implementation of Project Trust Accounts (PTAs) in the private sector for contracts over $3 million from 1 April 2023 to 1 March 2025, and for contracts over $1 million from 1 October 2023 to 1 October 2025. Master Builders Association Queensland, had expressed concerns about the complexity of PTAs and the lack of compliant software solutions, and the impact on smaller businesses in particular who don’t have internal resources to comply with the PTA regime.
A government-commissioned report provided the basis for a delay, highlighting the absence of compliant software, further complicating the situation for small businesses and leading to cashflow issues. The report also pointed to the cost of current software solutions under development, adding to the financial challenges faced by small businesses should PTAs go ahead on the previous timetable. The decision to postpone the PTA rollout aims to provide more time to address these challenges and mitigate potential burdens on the industry.
We have a solution for PTA compliance that is ready to go. Get in touch if you’d like to find out more.
It’s important to note that Project Trust Accounts continue to apply to state government (including hospital and health service) projects with a project value of $1 million or more, and all projects (including private sector and local government projects) with a project value of $10 million or more.
A project trust account (PTA) is a statutory bank account through which project trust funds are received and paid, which is governed by the Building Industry Fairness (Security of Payment) Act 2017 (“BIF Act”). The trustee (the Builder) is responsible for setting up and administering the project trust account for the project trust.
Each project eligible for a PTA must have a separate bank account, through which the large majority of the contractors and subcontractors on each individual project must be paid. This essentially means that Builders can no longer use funds from one project to pay for another project where both are required to have a PTA.
The PTA regime is already in place for:
Private projects with a contract value of $3 mil or more will be required to comply with the PTA regime from 1 March 2025, and from 1 October 2025 for contracts over $1 million.
Importantly for residential builders, the PTA regime does not apply to residential projects with less than 3 living units. This means that single dwelling or “two-pack” projects over $3 mil or more are exempt.
The initial establishment and ongoing compliance obligations under QBCC’s administrative regulations will present some real challenges for small to medium residential builders – particularly as the project and accounting platforms commonly used in the industry are not fit for purpose. So it’s not a matter of just using Xero or QuickBooks in a different way!
Further, there are some fundamental issues centered around the required compliance with the security of payments legislation (BIF Act), specifically around contracts and payment claim processes. One key issue is that the processes Builders have been using for decades around payment claim processes haven’t necessarily complied with the Security of Payments Act. Builders who are already running the gauntlet in compliance with this section of the BIF act will almost certainly come unstuck under the PTA regime.
If you have recently been approved for any hospital or state government work over $1mil or have a project that will go above the $3mil threshold for PTAs, it is critical that you get on the front foot with understanding and complying with your obligations.
From 1 January 2022, trustees of a retention trust or their nominated account administrator must complete retention trust training. Under new legislation, the training can only be undertaken through the QBCC. Visit QBCC to find out more.
That said, and given the complexities of the regime, I highly recommend attending Master Builder’s PTA Training Course. Designed to complement QBCC’s training, the team at master builders delivers content from the builder’s perspective, with a practical and common-sense approach to complying with PTA requirements.
It’s one thing to know what the regulations are… knowing how to implement them in your business is an entirely different thing.
We have already been working with a number of builders and other professional service providers to establish a solution for the setup and administration of PTAs – including a software platform to streamline the accounting processes.
If you’d like to find out more about our solution or are unsure about how PTAs works, feel free to get in touch and we can set up a time for an initial consultation.
