Statutory trust account (construction)
Statutory trust account: a regulator-monitored bank account holding subcontractor retention or progress payments under NSW, WA and Qld SOP Acts. Strict obligations.
Ask Chalkline about this →A statutory trust account in Australian construction law is a dedicated bank account at an Authorised Deposit-taking Institution (ADI) in which a head contractor must hold money belonging to subcontractors (retention amounts, project trust payments, or both, depending on the state). The account is held on trust: the money in it is not the head contractor’s working capital and is not available to the head contractor’s general creditors in the event of insolvency. Three of the SOP-Act states have a statutory trust regime (verified 2026-05-16):
| State | Trust type | Trigger threshold | Statute |
|---|---|---|---|
| NSW | Retention trust under s.12A | Head contract over $20m | Building and Construction Industry Security of Payment Regulation 2020 |
| WA | Retention trust scheme | Construction contracts over $20,000 incl. GST (from 1 February 2024) | Building and Construction Industry (Security of Payment) Act 2021 (WA), Part 4 |
| Qld | Project trust account and retention trust account | Currently private $10m+ / government $1m+ (expansion paused 31 January 2025) | Building Industry Fairness (Security of Payment) Act 2017 (Qld), Chapter 2 |
(See retention trust mechanism for the rationale, and the state-specific articles for the procedural detail.)
The head contractor’s obligations once a statutory trust applies:
- Open the trust account at a recognised ADI within the statutory window (commonly 5 to 10 business days of triggering threshold). The account name must include “Trust Account” or equivalent statutory wording.
- Notify the relevant regulator (NSW SafeWork SoP Branch, WA Commerce, Qld QBCC) that the account is opened and provide the ADI details.
- Deposit retention or trust money within the statutory window of receipt from the principal.
- Keep separate ledgers per beneficiary (each subcontractor’s retention or trust entitlement is tracked individually).
- Issue periodic statements to the regulator and beneficiaries, commonly every 3 months in NSW and Qld, more frequently in WA.
- Withdraw only as permitted: at end of defects liability period per the contract, with written agreement of the beneficiary, by direction of a court or tribunal, or to pay a beneficiary an entitlement under the trust.
- Maintain the trust to the statutory standard until all beneficiaries have been paid out. Closing prematurely is a regulator-prosecuted offence.
Penalty exposure for non-compliance is substantial: NSW historically $22,000 corporate; WA $50,000 corporate; Qld up to $50,000 per offence plus QBCC disciplinary action affecting licensing. Repeat or wilful breaches attract criminal prosecution.
Also known as: retention trust account; project trust account; SOP trust account.
Category: Contracts & commercial.
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Last updated: 2026-05-16. Verified: 2026-05-16. Quarterly review for currency.