Building Industry Fairness (Security of Payment) Act 2017 (Qld): BIFA Claims and Trust Accounts

Scope and reform history of the BIFA

The Building Industry Fairness (Security of Payment) Act 2017 (Qld) (BIFA) brought together existing legislation to create a unified framework for payments in the building and construction industry. It consolidated the Building and Construction Industry Payments Act 2004 (Qld) and the Subcontractors' Charges Act 1974 (Qld) into a single statute, which commenced operation on 17 December 2018. This legislation is regulated by the Queensland Building and Construction Commission (QBCC). Security of Payment (NSW) and Security of Payment (Vic) are similar pieces of legislation in other states.

Chapter 2 of the BIFA establishes the project trust account (PTA) and retention trust account (RTA) framework, designed to ensure funds are available for payments to contractors and subcontractors. Chapter 3 outlines the statutory right to progress payments and the adjudication regime, providing mechanisms for resolving payment disputes.

Further reforms were introduced through the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Act 2020 (Qld). These amendments created the current PTA/RTA framework, significantly impacting how project funds are managed and distributed within the building and construction sector.

Payment claims and adjudication under BIFA

Payment claims are a key mechanism under the *Building Industry Fairness (Security of Payment) Act 2017 (Qld)* (BIFA). To be valid, a payment claim must identify the work performed, state the amount claimed, and be in writing. It is no longer necessary for a payment claim to explicitly reference the Act. Security of Payment (NSW) and Security of Payment (Vic) operate similarly.

Following receipt of a payment claim, the respondent is required to provide a payment schedule within 15 business days, or any shorter period stipulated in the relevant contract. This schedule details the amount the respondent agrees to pay, the date of payment, and any disputed amounts with reasons. Failure to provide a payment schedule or to pay the scheduled amount allows the claimant to pursue either adjudication or recover the amount as a debt.

If a dispute arises, the claimant can initiate adjudication. Adjudication applications are lodged with an Adjudication Registry administered by the Queensland Building and Construction Commission (QBCC). An adjudicator must make a decision within 10 business days of appointment, with potential extensions by mutual agreement. BIFA also establishes maximum payment terms: 25 business days for subcontractor invoices and 15 business days for head contractor invoices.

Project trust accounts (PTAs)

Project trust accounts (PTAs) are mandatory for certain construction contracts in Queensland. From 1 January 2022, PTAs are required for Queensland State Government and Hospital and Health Service contracts valued at $1 million or more (excluding GST). From 1 April 2023, the requirement extends to private-sector and local government contracts of $10 million or more (excluding GST). National Construction Code compliance is relevant to all construction projects.

A PTA is held by the head contractor in a trustee capacity, with the head contractor and first-tier subcontractors acting as beneficiaries. The purpose of the PTA is to provide security for payments to subcontractors. The head contractor must establish the PTA within 20 business days of entering into the first eligible subcontract. Portable long service leave for construction entitlements are also relevant considerations for construction workers.

The rollout of PTAs has been paused. Further reductions to the contract value thresholds (planned for $3 million and $1 million) were suspended from 31 January 2025, pending a review of the scheme. Certain residential building contracts and specific government-related contracts are exempt from the PTA regime.

Retention trust accounts and enforcement

Where cash retentions are held under a contract that is eligible under the Building Industry Fairness (Security of Payment) Act 2017 (Qld), the head contractor is obligated to maintain a retention trust account (RTA). This account must hold the retention amounts, inclusive of GST, on trust until they are released to the beneficiary subcontractors. Each contractor establishes a single RTA to cover all eligible contracts. Workers compensation by state

Trustees managing RTAs must provide subcontractors with notice regarding both the deposit of retention amounts and their subsequent release. A change to reporting requirements occurred from 1 July 2024, with trustees no longer required to obtain an annual account review report from an auditor. Industrial manslaughter by state

Failure to comply with requirements to operate a trust account where it is mandated can result in significant penalties. These penalties exceed 500 penalty units (equivalent to $78,500 in 2025) and may include imprisonment for executive officers. The Queensland Building and Construction Commission (QBCC) possesses the authority to audit, inspect, and request information from both PTA and RTA trustees, as outlined in chapter 2 of BIFA.