Statutory Trusts
Statutory Trusts Requirements (Chapter 2 BIFA)
Project Bank Accounts commenced for some government projects on 1 March 2018. On 1 March 2021, they were replaced with Statutory Trusts. Statutory Trusts will be rolled out to other government projects and the Private Sector at the following times:
| Commencement Date | Principal | Contract Price (excl GST) |
|---|---|---|
| 1 March 2021 | State Government | $1M - $10M |
| All State Authorities (if it opts in) | $1M or more | |
| 1 July 2021 | State Government or Hospital and Health Services | $1M or more |
| Other State Authorities (if it opts in) | $1M or more | |
| 1 January 2022 | State Government or Hospital and Health Services | $1M or more |
| Other State Authorities (if it opts in) | $1M or more | |
| Other State Authorities (mandatory) | $10M or more | |
| Private Entity | $10M or more | |
| 1 April 2025 | State Government or Hospital and Health Services | $1M or more |
| Other State Authorities (if it opts in) | $1M or more | |
| Other State Authorities (mandatory) | $3M or more | |
| Private Entity | $3M or more | |
| 1 October 2025 | State Government or Hospital and Health Services or all State Authorities | $1M or more |
| Private Entity | $1M or more |
All existing projects operating under the previous Project Bank Account model can continue under that model until completion of the project. However, head contractors had the option to transition a PBA project to the new Statutory Trusts model as long as it was fully transitioned prior to 1 October 2021. That option is no longer available.
Statutory Trusts require one Project Trust Account to be opened for every project and a single Retention Trust Account for each head contractor if they hold cash retention on subcontractors under a Statutory Trust project.
The Statutory Trusts model is significantly different to the Project Bank Accounts model and whilst there are a number of benefits to the new Statutory Trusts Model compared with the previous Project Bank Accounts model, there are significant differences and additional obligations – many of which carry significant penalties and legal consequences for non-compliance.
Wood L&M Solutions can assist head contractors to modify their systems and processes to comply with the obligations that apply to Statutory Trusts. We can also assist in assessing when the head contractor is liable to pay a subcontractor as that is the trigger for many of the restrictions that apply to Statutory Trusts. Wood L&M Solutions can also be engaged to act as agent of the head contractor under chapter 2 BIFA.
To help clients and industry participants to understand the detailed requirements of the Statutory Trust regime, we have developed a Resource Library that walks through all of the requirements and answers many of the questions that arise regarding the specifics of chapter 2 BIFA. If you have any queries regarding the requirements or suggestions on other areas that we can address in the Resource Library, please contact us so we can consider adding it to the Library.
System Setup Assistance and Management
Statutory Trusts under chapter 2 of the Building Industry Fairness (Security of Payment) Act 2017 are currently mandatory (with some exceptions) for government projects $1M or more excluding GST and private sector projects $10M or more excluding GST. There are a number of things that need to be in place before you can efficiently manage a Project Trust Account or a Retention Trust Account. We have been developing a platform to manage the trust accounts electronically while also linking in with existing construction management software systems. The platform is easy to use and integrates with Microsoft Outlook and some other email systems and can be linked to any other system that has API access. The system that we use can streamline the mandatory notices that must be sent at various times throughout the project, significantly reducing the administration time required to manage these accounts. The system can also easily provide the reports and/or information if requested by a subcontractor beneficiary as required by the legislation.
We are able to set up a system that will help you to minimise your management effort with respect to your trust account obligations as well as integrate with your email system. We can do as much or as little as you would like and will work with any existing system providers that you are using to streamline your processes as much as possible.
Last updated: 21 March 2023