On 8 December 2014, the New South Wales Government
announced the implementation of a long-foreshadowed retention trust
scheme for the holding of subcontractor retention monies. There is
also to be a comprehensive overhaul of the state's Security of
The New South Wales Fair Trading Minister has announced that,
after a lengthy period in limbo, a trust scheme for retention money
in relation to subcontractors is now to be implemented. Head
contractors should beware given the proposed AUD 22,000 fines for
Not only has the NSW Government announced the
"ground-breaking" creation of a cash retention trust
scheme for "the protection of subcontractors", but we
have also been told to expect in 2015 a full review of the
Building and Construction Industry Security of Payment Act
Key messages from the New South Wales Fair Trading
Minister's announcement yesterday include:
initially, the retention money scheme only will apply to head
contractors and their direct subcontractors for projects of more
than AUD 20 million;
head contractors will be required to deposit
subcontractors' retention money into approved accounts with
authorised deposit-taking institutions;
NSW Fair Trading (rather than the Office of the Small Business
Commissioner, as previously envisaged) will check annual audit
reports as a compliance mechanism to ensure that head contractors
retain the money in approved trust accounts ; and
fines of up to AUD 22,000 apply for failure to comply.
NSW Fair Trading has released a draft regulation and impact
statement for public consultation, which closes on 8 January
The NSW Government is also considering whether to impose
personal liability on company directors for failure to comply with
the scheme, but more is expected to come to light during the
statutory review of SOPA next year.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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