STATUTORY RETENTION ACCOUNTS FOR PROJECTS ABOVE $20 MILLION
The Building and Construction Industry Security of Payment Amendment (Retention Money Trust Account) Regulation 2015 requires head contractors to hold subcontractor's retention monies in a trust account.
Who is affected?
The Regulation commences on 1 May 2015 and applies to projects where the head contract is valued at $20 million or more. Where a variation increases the head contract value to above $20 million then the Regulation will apply only to subcontracts entered into after the date of the variation.
Head contractors must hold retention money in a trust account with an authorised deposit-taking institution and must give notice to the Chief Executive of the Office of Finance and Services when a retention trust account is opened.
A head contractor cannot withdraw from the trust account except in accordance with the terms of the relevant contract, for example if the contract allows the head contractor to access retention monies to rectify defects.
The head contractor may establish a single trust account for;
- all retention monies; or
- for all retention monies for a particular project; or
- retention money held for a particular subcontractor.
At the end of each financial year, head contractors must provide the Chief Executive with an account review report from a registered company auditor and a retention account statement.
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