On 13th December 2019, CSSP representatives attended the Building Industry Fairness Reforms meeting, conducted by the Department of Housing and Public Works, outlining recommendations for Project Bank Account Reforms.
In line with proposed recommendations, we have been making modifications to our Cheops Construction Management Software to ensure it will comply with the proposed legislative changes. CSSP has also been working with clients to ensure they are prepared for these changes.
Below is a summary of the proposed legislation that is now before Parliament to introduce Project Trust Accounts for every construction contract over $1 million by 1/7/2022:
- 1/7/2020 – Government and Hospital and Health Services building construction contracts valued at ≥$1 million ex GST
- 1/7/2021 – Private sector and local government building construction contracts valued at ≥$10 million ex GST
- 1/1/2022 – Private sector and local government building construction contracts valued at ≥$3 million ex GST
- 1/7/2022 – Private sector and local government building construction contracts valued at ≥$1 million ex GST
Currently trust accounts are only required for a head contractor of services (1st tier contractors). Under the new framework, trust accounts will be required for 2nd tier contractors who meet the prescribed conditions.
Under the current legislation, three trust accounts are required:
- General Trust Accounts
- Retention Trust Accounts
- Disputed Funds Trust Accounts
Under the new legislation, Disputed Funds Trust Accounts will be removed as a requirement, and only General Trust Accounts and Retention Trust Accounts will be required.
It will be legislated as an offence to pay less than an approved payment scheduled amount.
It was recommended that each construction company have a single Retention Trust Account for each sub-contractor rather than one per project. This recommendation has not been finalised and is still in consultation.
All companies operating trust accounts will have to attend compulsory training on how to operate a trust account legally.
CSSP will continue to carry out modifications to comply with the above legislative changes once they are passed into law and will communicate with customers to ensure they are informed and prepared for these proposed changes.
If you would like further information about the Project Bank Account Reforms and how Cheops software addresses this, or would like to meet with a Cheops Specialist on site for further discussions about compliance, please contact CSSP.
Disclaimer: This article is supplied as information only. The contents do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. You should seek independent legal advice or other professional advice in relation to any particular matters you or your organisation may have.