• Skip to content
  • Skip to navigation

Grant Thornton Australia

Grant Thornton uses cookies to monitor the performance of this website and improve user experience.

If you are happy to accept cookies from this site, please check the box.

To find out more about cookies, what they are and how we use them, please see our privacy notice, which also provides information on how to delete cookies from your hard drive.

How to be COVIDSafe when visiting Grant Thornton offices. Find out how

Global site
  • Global site
  • Algeria
  • Botswana
  • Cameroon
  • Egypt
  • Ethiopia
  • Gabon
  • Guinea
  • Kenya
  • Libya
  • Malawi
  • Mauritius
  • Morocco
  • Nigeria
  • Namibia
  • Senegal
  • South Africa
  • Togo
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe
  • Anguilla
  • Antigua
  • Argentina
  • Aruba, Bonaire, Curacao and St. Maarten
  • Bahamas
  • Barbados
  • Bolivia
  • Brazil
  • British Virgin Islands
  • Canada LLP
  • Canada RCGT
  • Cayman Islands
  • Chile
  • Colombia
  • Costa Rica
  • Dominica
  • Ecuador
  • El Salvador
  • Grenada
  • Guatemala
  • Honduras
  • Mexico
  • Montserrat
  • Nicaragua
  • Panama
  • Paraguay
  • Peru
  • Puerto Rico
  • St Kitts
  • St Lucia
  • St Vincent and the Grenadines
  • Trinidad & Tobago
  • United States
  • Uruguay
  • Venezuela
  • Turks & Caicos
  • Afghanistan
  • Australia
  • Bangladesh
  • Cambodia
  • China
  • Hong Kong
  • India
  • Indonesia
  • Japan
  • Korea
  • Malaysia
  • Mongolia
  • Myanmar
  • New Zealand
  • Pakistan
  • Philippines
  • Singapore
  • Taiwan
  • Thailand
  • Vietnam
  • Albania
  • Armenia
  • Austria
  • Azerbaijan
  • Belarus
  • Belgium
  • Bosnia and Herzegovina
  • Bulgaria
  • Channel Islands
  • Croatia
  • Cyprus
  • Czech Republic
  • Denmark
  • Estonia
  • Finland
  • France
  • Georgia
  • Germany
  • Gibraltar
  • Greece
  • Hungary
  • Iceland
  • Ireland
  • Isle of Man
  • Israel
  • Italy - Bernoni
  • Italy - Ria
  • Kazakhstan
  • Kosovo
  • Kyrgyzstan
  • Latvia
  • Liechtenstein
  • Lithuania
  • Luxembourg
  • Macedonia
  • Malta
  • Moldova
  • Monaco
  • Netherlands
  • Northern Ireland
  • Norway
  • Poland
  • Portugal
  • Romania
  • Russia
  • Serbia
  • Slovak Republic
  • Slovenia
  • Spain
  • Sweden
  • Switzerland
  • Tajikistan
  • Turkey
  • Ukraine
  • UK
  • Uzbekistan
  • Bahrain
  • Egypt
  • Jordan
  • Kuwait
  • Oman
  • Qatar
  • Saudi Arabia
  • United Arab Emirates
  • Yemen
  • Lebanon
Grant Thorton Logo

Grant Thornton Logo Grant Thornton Logo

Contact us
  • Insights
  • Services
  • Industries
  • Meet our people
  • Careers
  • News centre
  • Locations
  • About us
  • Audit
  • Tax
  • Private Advisory
  • Financial Advisory
  • Grant Thornton Consulting
  • Asia
Audit Home
  • Audit methodology
  • Audit technology
  • Financial reporting advisory
Tax Home
  • Corporate tax
  • Employee equity reward schemes
  • Fringe benefits tax
  • Global mobility services
  • GST & indirect tax
  • International tax
  • Payroll assurance
  • Research & development
  • Tax compliance
  • Tax governance & risk management
  • Tax in mergers & acquisitions
  • Tax lawyers
  • Transfer pricing
Private Advisory Home
  • Family Business Consulting
  • Family office services
  • Private wealth
  • Superannuation
Financial Advisory Home
  • Corporate finance
  • Debt advisory
  • Forensic consulting
  • Payments advisory
  • Restructuring advisory
Grant Thornton Consulting Home
  • Business risk
  • Human capital
  • Performance improvement
  • Strategy & growth
  • Technology consulting
  • GNC Group Consulting
Asia Home
  • China practice
  • India practice
  • Japan practice
  • Agribusiness, food & beverage
  • Automotive dealers
  • Education
  • Energy & resources
  • Financial services
  • Health & aged care
  • Life sciences
  • Manufacturing
  • Not for Profit
  • Professional services
  • Public sector
  • Real estate & construction
  • Retail & consumer products
  • Technology & media
Agribusiness, food & beverage Home
Bite Size Dealtracker Food, Beverage & Agribusiness industry insights
Key insights for the Australian Food, Beverage & Agribusiness industry.
Financial services Home
  • Banking
  • Fintech
  • Private Health Insurance
  • Superannuation
  • Asset management
  • BEAR FAQs
  • Open banking
Royal Commission wrap up Top 10 things for Financial Services providers
Eleven months on from the first round of hearings for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Commissioner Hayne’s final report has been released.
Health & aged care Home
Aged Care Royal Commission Perspectives on the Future of Ageing
Transitions in ageing are not consistent and systematic as they are described by our ageing systems. Sometimes they are incremental, sometimes accidental, sometimes monumental, and they are always personal. We can create something better.
Life sciences Home
Biotechnology Industry Position survey Australia's biotechnology industry drives economic growth
The 2019 Biotechnology Industry Position survey conducted by Ausbiotech and supported by Grant Thornton has revealed that new technologies across regenerative medicine and medicinal cannabis are disrupting the industry, and Australia's global strength in clinical trials continues to drive contributions to the economic and social fabric of the country.
Manufacturing Home
mid-sized business report Manufacturing is critical to our economy – how can we support the sector?
Although the knock-on effects of the Australian automotive industry exiting our country are yet to be fully understood, the industry is evolving, and manufacturing continues to be a major employer and critical to our overall economy.
Not for Profit Home
NATIONAL OUTCOMES MEASUREMENT PROGRAM A practical framework
Royal Commissions and federal budgets are critical things for Nonprofit human service providers to be thinking about at this point in time.
Real estate & construction Home
mid-sized business report Supporting affordable housing requires planning, certainty – and tax reform
There is a lot of noise around the property sector at the moment – and it’s not all positive. Prices are down – but this shouldn’t be a surprise when some markets (namely Sydney & Melbourne) saw unprecedented hikes in recent years.
Retail & consumer products Home
GNC Group Consulting The Technology Trap: Online innovation in retail
I recently attended the NRF Retail Big Show in New York, an overwhelming smorgasbord of retail technology and new store concepts.
Technology & media Home
  • Telecommunications
Scaling-up for Growth From start-up to scale-up
Navigating the complexities of growth and maintaining previous success is a challenge for all mid-size businesses.
  • Working at Grant Thornton
  • Student opportunities
  • Experienced careers
  • Contact us
Working at Grant Thornton Home
  • Flexibility
  • Your career and development
  • Diversity and inclusion
  • In the community
  • What we offer you
Student opportunities Home
  • Graduates
  • Vacationer Program
  • The application process
  • FAQs
  • Student application tips and tricks
Experienced careers Home
  • Client spotlight
  • Grant Thornton Australia | Audit, Tax and Advisory
  • Client alerts
  • 2017
  • Building Industry Fairness (Security of Payment) Bill 2017

Building Industry Fairness (Security of Payment) Bill 2017

25 Sep 2017
  • Building Industry Fairness (Security of Payment) Bill 2017

The Queensland government recently introduced the Building Industry Fairness (Security of Payment) Bill 2017 for its first reading.

If passed, the Bill will:

  • Replace the Building and Construction Industry Payments Act 2004 (‘BCIPA’);
  • Replace the Subcontractors Charges Act 1974; and
  • Amend the Queensland Building and Construction Commission Act 1991 in relation to phoenix companies.

The Bill responds to concerns subcontractors concerns regarding security for payment on large construction jobs and contains the most wide-reaching amendments to legislation governing the building and construction industry since the initial introduction of the Building and Construction Industry Payments Act 2004 (BCIPA) in 2004. 

In addition to consolidating into one Act the BCIPA and the Subcontractors’ Charges Act 1974 (SCA), the Bill provides for three new significant changes to the Queensland building and construction industry:

  1. introduction of Project Bank Accounts (PBAs);
  2. re-introduction of mandatory financial reporting for building companies; and
  3. new measures and powers to allow the government to stop corporate phoenixing.

Project Bank Accounts (PBA’s)- Commencing 1 January 2018

The introduction of PBA’s is considered the most controversial change and has attracted the greatest level of commentary to date. So what is proposed? 

The Bill provides for the introduction of PBAs from January 2018 on all building contracts for government projects with a building price between $1m and $10m. From 1 January 2019, PBA’s will apply to all building contracts over $1m.

PBA’s are not planned to apply to:

  • residential construction work;
  • exclusive maintenance work;
  • government contracts where the tender was issued prior to the Act;
  • subcontracts (i.e the obligation to use a PBA sits with the head contractor only).

Within 20 business days of entering into the first subcontract, the head contractor is required to set up 3 PBA’s for the project:

  • general trust account
  • retention trust account
  • disputed funds trust account

A failure to do so may result in the head contractor incurring a fine of $63,075.

PBAs are externally administered bank accounts that operate as a trust account between the principal and head contractor. The head contractor and each subcontractor are beneficiaries of the PBA and will involve the following process:

  1. The principal deposits amounts payable to the head contract directly into the PBA;
  2. If a subcontractor is entitled to be paid under a subcontract with the head contractor, the head contractor will pay the subcontractor with funds from the PBA ($25,230 penalty or 1-year imprisonment); and
  3. The head contractor can only be paid from the PBA when it is owed money by the principal under the building contract and the head contractor is not liable to pay a subcontractor for the same work ($25,230 penalty or 1-year imprisonment).

If there is a shortfall in the PBA (eg. due to head contractor’s budgeting error or dispute with the subcontractor), the head contractor is required to deposit funds equal to the shortfall (including any disputed amount). Should the head contractor fail to do this and instead utilise PBA funds to pay itself penalties of $37,845 and 2 years imprisonment may apply.

This requirement may challenge head contractors already experiencing tight cash flow that may be reliant on subcontractor retention monies and/or delayed subcontractor payments.

To varying degrees, head contractors often rely upon a blended operating margin across multiple projects to ‘smooth out’ anomalies in monthly funding requirements due to budgeting errors or timing differences (a head contractor’s milestones with the principal may differ to those with subcontractors). The new PBA regime is therefore likely to be a ‘bumpy’ ride for head contractors’ working capital management (at least initially).

Principals may be comforted that the PBA regime will ensure their progress payments are quarantined for the benefit of subcontractors on their project (and not redirected to other projects in circumstances of a financially distressed head contractor). They are also likely to be pleased by the fact that they will have full visibility of the PBA and therefore the operating margin of their head contractors.

PBA funds are unable to be invested and head contractors will not be entitled to payment for administration of PBAs. 

PBA regimes were introduced in Western Australia (Sept 2016) and NSW (May 2015) but with different thresholds ($1.5m and $20m respectively). Interestingly, the NSW regime requires that only subcontractor retentions be banked into a PBA and allows one common ‘Retention’ PBA to be utilised across multiple projects. The annual cost of auditing the Retention PBA alone ranges between $2k and $6k. One would expect that the administration and compliance costs of the Queensland regime (which is more complex and may ultimately apply to the vast majority of non-residential projects) and will be significantly more. 

There appears little doubt that the PBA requirements will increase the administrative costs of head contractors, the test will be whether it improves outcomes for subcontractors and whether subcontractors, in turn, reduce their margins to reflect an improved environment of operational risk.   

For more information, please contact:

Cameron Crichton
Cameron Crichton
Partner Brisbane
Email address https://www.linkedin.com/in/cameroncrichtongt/ Cameron Crichton VCard
View full profile
Share this page
  • Share this page on Facebook LinkedIn
  • Share this page on Twitter Twitter
  • Share this page on LinkedIn LinkedIn
  • Share this page on Wechat WeChat
  • Share this page via email Email
  • Follow us on youtube
  • Follow us on linkedin
  • Follow us on twitter
  • Follow us on facebook
Connectclose
  • Contact us
  • Locations
  • Meet our people
  • Subscribe
  • Staff portal
Aboutclose
  • About us
  • Careers
  • News centre
  • Client alerts
  • Grant Thornton Foundation
  • Grant Thornton Affinity
Legalclose
  • Privacy
  • Compliance and ethics
  • Disclaimer
  • Site map

© 2021 Grant Thornton Australia Limited – All rights reserved

    • EN
    • Contact us