INSIGHT · CONTRACTS & PAYMENTS
Retention money: four trust rules,
and thresholds from $20,000 to $20 million.
Retention money rules differ between the states. As read on 2 November 2026, a trust applies in NSW to head contractors on projects of $20 million, in WA to contracts above $20,000 entered into from 1 February 2024, in Queensland to cash retentions on contracts linked to a project trust, and in the NT as an implied term where the contract is silent. Of the Acts read, Queensland's alone caps retention: 5% before practical completion and 2.5% after. Victoria has set release and notice rules since 15 April 2026.
Analysed 2 November 2026 · NSW Government pages (modified 26 August 2025 and 6 October 2026) · Security of payment Acts of Victoria (Authorised Version 015, as at 24 June 2026), Queensland (current from 28 April 2026), WA (as at 21 October 2026), Tasmania (authorised version 14 July 2025), the ACT (Republication 14) and the NT (as in force at 25 May 2024) · QBCC Act 1991 (Qld, current from 1 February 2026) · WA Regulations (as at 1 July 2026) · South Australia not verified · all read 2 November 2026.
Key takeaways
- Four jurisdictions put retention money in a trust, on four different tests: NSW: head contractors on projects valued at $20 million, as Building Commission NSW states the 2020 Regulation. WA: contracts above $20,000 entered into from 1 February 2024 (s 70, reg 11). Queensland: cash retentions under a withholding contract, which follows the project trust (BIF Act s 32). NT: an implied term where the contract has no written provision on the status of the amount (s 24, Schedule 1 cl 10).
- Queensland's Act sets numeric limits: Queensland Building and Construction Commission (QBCC) Act 1991, Part 4A: 5% of the contract price before practical completion (ss 67K, 67L), 10% of each payment (s 67M), 2.5% after practical completion (s 67N). Part 4A does not cover domestic building contracts (s 67AAA).
- Victoria regulates release, not holding: Since 15 April 2026 the Victorian Act treats retention money and performance bonds together as performance security: a notice and at least 5 business days before recourse (s 17H), and a term releasing security later than 20 business days after a claim has no effect (s 12(1B)). The Act read contains no retention trust.
- Tasmania's and the ACT's Acts do not mention retention; South Australia could not be read: The word does not appear in Tasmania's 2009 Act or the ACT's 2009 Act at the versions read. South Australia's Act is not verified (2 Nov 2026).
- WA's construction trust law has passed but has not commenced: The Amendment Act 2026 (No. 16 of 2026) received assent on 21 October 2026. Its Part 2 commences on a day fixed by proclamation (s 2(b)) and would add an offence, with a $50,000 fine, for failing without reasonable excuse to pay retention money into a retention money trust account.
- We would store each amount held with its account and its date: A system-design recommendation: each retention line carries the state, the contract date and price, the amount held, the trust account, the statements given and the release date.
Retention money rules
in each state and territory
Australian retention money rules sit in each state's security of payment law, and they answer different questions: whether the money must be held on trust, from what value, how much may be held, and when it is released. Queensland adds a separate cap in its QBCC Act.
WA's s 70 is tested on the contract's value when entered into and after any variation.
| State | Trust or holding rule | Threshold | Instrument and version read |
|---|---|---|---|
| NSW | NSW: a head contractor must hold subcontractors' retention money in a trust account with an authorised deposit-taking institution (ADI), and may withdraw only under the subcontract or as agreed in writing. A ledger goes to the subcontractor at least every 3 months, or as agreed but at least every 6 | NSW: the regulator's pages say "over $20m", "$20 million or more" and "at least $20 million". If value reaches $20 million after the head contract, the rule applies only to contracts entered into after that point | NSW Government pages, Retention money (modified 6 October 2026) and FAQs (modified 26 August 2025), read 2 Nov 2026. Security of Payment Regulation 2020 and 1999 Act text not verified (2 Nov 2026) |
| Victoria | Victoria: no retention trust in the Act read | Victoria: no value threshold for the performance security rules. The Act does not apply to a domestic building contract between a builder and a building owner, with limited exceptions (s 7(2)) | Building and Construction Industry Security of Payment Act 2002, Authorised Version 015 as at 24 June 2026, read 2 Nov 2026 |
| Queensland | Queensland: cash retention under a withholding contract goes into a retention trust account, opened before the amount is withheld (BIF Act ss 32, 34, 35). Government contracting parties are excluded (s 32(5)(a)) | Queensland: the contract must be linked to a project trust. A contract is eligible at more than 50% project trust work and a price, excluding GST, of $1 million or more (State or Hospital and Health Service, or a State authority that opts in) or $10 million or more otherwise, tested when entered into (s 14) and on some amendments (s 14A). A project trust is then required once work is subcontracted, unless an exemption applies (ss 12, 15A to 15F) | BIF Act 2017, current from 28 April 2026; BIF Regulation 2018, current from 1 July 2025; QBCC Act 1991 Part 4A, current from 1 February 2026, read 2 Nov 2026 |
| South Australia | South Australia: not verified (2 Nov 2026) | South Australia: not verified (2 Nov 2026) | Building and Construction Industry Security of Payment Act 2009 (SA): not verified (2 Nov 2026) |
| WA | WA: retention money is held on trust by the party retaining it (s 71) and paid into a retention money trust account, established within 10 business days after the contract, within 20 business days if the contract comes under Part 4 later, or before payment if the money is paid separately as security (s 74). The holder may not set off a liability under another contract (s 72(2)) | WA: above $20,000 for contracts entered into from 1 February 2024; above $1,000,000 for contracts from 1 February 2023 to before 1 February 2024 (reg 11), amounts including GST (reg 3(2)). Excludes government parties, small-scale residential contracts such as a single dwelling subcontract (reg 12), and some home building contracts (s 70(2)) | Building and Construction Industry (Security of Payment) Act 2021, as at 21 Oct 2026; Regulations 2022, as at 1 Jul 2026, read 2 Nov 2026 |
| Tasmania | Tasmania: the Act read does not use the word retention | Tasmania: none in the Act read | Building and Construction Industry Security of Payment Act 2009, authorised version 14 July 2025, read 2 Nov 2026 |
| ACT | ACT: the Act read does not use the word retention | ACT: none in the Act read | Building and Construction Industry (Security of Payment) Act 2009, Republication 14 effective 6 December 2025, read 2 Nov 2026 |
| NT | NT: where the contract has no written provision on the status of the retained amount, the principal holds it on trust for the contractor (s 24, Schedule 1 cl 10) | NT: no value threshold in s 24 or Schedule 1 cl 10 | Construction Contracts (Security of Payments) Act 2004, as in force at 25 May 2024, read 2 Nov 2026 |
How much may be held,
and how it is released
Queensland's Part 4A applies to building contracts and does not include domestic building contracts or contracts exclusively for construction work that is not building work (QBCC Act s 67AAA).
| State | Cap on amount | Release and recourse |
|---|---|---|
| NSW | NSW: no cap stated. The regulator describes "usually up to 5%" as a practice, not a limit | NSW: under the contract, as the regulator's page describes it |
| Victoria | Victoria: none in the Act read | Victoria: released on the contract date; if the contract does not expressly say, 10 business days after the earliest day a claim may be served (s 12(1A)). A term releasing later than 20 business days after a claim has no effect (s 12(1B)). A claim may be served from the earlier of 20 business days after the defects liability period ends or a contract day or event (s 17B). Notice and at least 5 business days before recourse (s 17H) |
| Queensland | Queensland: 5% of contract price before practical completion (QBCC Act ss 67K, 67L), 10% of each payment (s 67M), 2.5% after practical completion for defects (s 67N). A principal or special purpose vehicle may opt out of the 5% limit in a written, initialled term (s 67K(4)); s 67L(3) excludes special purpose vehicle subcontracts | Queensland: released under the contract; with no identifiable period, 12 months after practical completion (s 67NA). Failure without reasonable excuse: up to 200 penalty units or 1 year's imprisonment (s 67NB). Notice in the approved form within 10 business days before the defects period ends, not for principals (s 67NC). Written notice within 28 days after becoming aware of the right, to use a security or retention amount for an amount owed (s 67J) |
| South Australia | South Australia: not verified (2 Nov 2026) | South Australia: not verified (2 Nov 2026) |
| WA | WA: none in the Act read | WA: under the contract. The trust ends on the earliest listed event, including 2 years after written notice that the money is due for release (s 69). Notice and at least 5 business days before recourse (s 57). A party may swap retention money for a performance bond (s 59) |
| Tasmania | Tasmania: none in the Act read | Tasmania: none in the Act read |
| ACT | ACT: none in the Act read | ACT: none in the Act read |
| NT | NT: none in the Act read | NT: the implied trust runs until the money is paid, the contractor gives up the claim in writing, it ceases to be payable, or a decision-maker so decides (Schedule 1 cl 10) |
Retention bond vs retention money
A retention bond replaces cash held back from a claim with an instrument issued by a third party. In the instruments read, the distinction changes which rules apply.
- WA gives a right to swap: WA's Act defines a performance bond as an instrument, whether described as a bond, guarantee or otherwise, issued by an authorised issuing institution to pay on demand up to a limit (s 56). Section 59(1) states a party is entitled to the release of retention money by substituting a performance bond in accordance with that section, and a claimant may seek it in a payment claim (s 59(2)).
- Victoria treats the two as one category: Section 4(1) defines performance security as a performance bond or retention money, so the notice in s 17H and the release timing in ss 12 and 17B apply to either.
- Queensland's cap counts both, but its trust counts cash: QBCC Act s 67A defines security to include a banker's undertaking, bond, inscribed stock, guarantee policy or interest bearing deposit. The 5% and 2.5% limits count retention amounts and securities together. The BIF Act retention trust applies to amounts withheld in the form of cash (s 32(1)(b)).
- NSW's page describes cash retention: Building Commission NSW describes cash retention as a security provided by subcontractors and held from progress payments. Its page does not address bonds.
How retention is calculated
under Queensland's limits
Queensland retention is calculated against three limits in Part 4A of the QBCC Act 1991, and they use two different bases: the contract price and the amount of each payment. The figures below are an invented example for a $1,000,000 subcontract.
The 5% limit does not apply to amounts protecting the contracting party for items paid for but not yet installed (ss 67K(3), 67L(2)). None of the other states' Acts read sets a percentage.
| Test | Section | Limit | On an invented $1,000,000 subcontract (our calculation) |
|---|---|---|---|
| Total retention and security before practical completion | s 67L (subcontract), s 67K (principal or special purpose vehicle) | 5% of the contract price | $50,000 |
| Retention from one payment | s 67M | 10% of the amount that relates to the work | $10,000 on a $100,000 progress amount |
| Total retention and security after practical completion, for defects | s 67N | 2.5% of the contract price | $25,000 |
What changed, and what has not commenced
Retention rules changed in Victoria on 15 April 2026 and in WA by staged thresholds, and a WA amendment passed in October 2026 has not commenced. Queensland's lower trust thresholds remain uncommenced text.
The WA statutory construction trust in Part 4 Division 2 is written for government-side contracts, and no threshold regulation had been seen on 2 November 2026.
| State | Before | Now | Status and transition | Instrument and version read |
|---|---|---|---|---|
| NSW | A June 2020 Regulatory Impact Statement proposed reducing the threshold from $20 million to $10 million | The regulator's pages modified in 2025 and 2026 state $20 million | Current regulator statement; the Regulation text is not verified (2 Nov 2026) | Regulatory Impact Statement, June 2020; NSW Government pages, read 2 Nov 2026 |
| Victoria | The term performance security did not appear in the Act before amendment, as our Victorian page records | Sections 12(1A), 12(1B) and 17A to 17H | In force since 15 April 2026. Our Victorian page sets out the transitional rule | Authorised Version 015 as at 24 June 2026, read 2 Nov 2026 |
| Queensland | Phases lowering the $10 million threshold to $3 million and $1 million were scheduled, then paused on 10 February 2025, as our Queensland page records | $10 million or more for contracting parties other than the State or a Hospital and Health Service (s 14) | The lower thresholds sit in chapter 9 part 1 divisions 3 and 4, not commenced in the version read | BIF Act, current from 28 April 2026, read 2 Nov 2026 |
| WA | Above $1,000,000 for contracts entered into from 1 February 2023 and before 1 February 2024 | Above $20,000 for contracts entered into from 1 February 2024 | In force. Reg 11 sets the threshold by contract date | Regulations 2022 as at 1 Jul 2026, read 2 Nov 2026 |
| WA | No construction trust, and no offence in s 74 | Construction trusts for State agency contracts at or above a threshold to be prescribed, and contracts of a State agency or government trading enterprise that opt in (s 76C). New s 74(1A): an offence for failing without reasonable excuse, with a fine of $50,000 | Passed, not commenced. Assent 21 October 2026; Part 2 on a day fixed by proclamation (s 2(b)) | Amendment Act 2026, No. 16 of 2026, as passed, read 2 Nov 2026 |
What a retention trust changes
if the holder fails
A statutory retention trust bears on what creditors can reach if the party holding the money fails. WA's Act states that while retention money is held on trust it is not available for payment to a third-party creditor of a party to the contract and is not liable to be attached or taken in execution for a judgment in favour of such a creditor (s 71(3)). Building Commission NSW states its rules seek to protect subcontractors' retention money, including if a construction company becomes insolvent.
- Builder liquidation by state: What happens to money owed and held when a builder fails.
- Security of payment timeframes by state: The claim and schedule clocks, read in the same Acts.
- Queensland trust account rollout paused: How the project trust thresholds were set and why each contract carries its own answer.
- Victoria's security of payment reforms: The 15 April 2026 changes in detail.
What we would put in a system
Retention records need the fields below so that a release date, a trust question or a recourse notice can be answered from the file. This is our system-design recommendation, not a legal requirement.
Where agents help here is narrow. An agent can read a subcontract and a claim, extract the retention percentage, amount and defects period, and propose release dates; a person confirms them. No agent decides whether a trust is required, whether a term has effect or whether a party may have recourse. Those are questions for the parties, a regulator, an adjudicator or a court, with your advisers.
| Field | Why it is load-bearing |
|---|---|
| State, instrument and version read | Eight jurisdictions, with trust, cap and release rules in different instruments, and one WA amendment waiting on proclamation. |
| Contract date, price at entry and later variations | WA tests value when entered into and after variation (s 70). Queensland tests eligibility when the contract is entered into (s 14) and on some amendments (s 14A). NSW applies the rule to later contracts once the project reaches $20 million. |
| Amount held per claim, form and cap check | Cash, bond or guarantee, with the running total against the contract price where Queensland's 5% and 2.5% limits apply. |
| Trust bank account, opening notices and statements | The account name, institution and date opened; each notice to the regulator or the other party; each ledger or statement given (NSW every 3 months by default); Queensland's prescribed trust records, including monthly reconciliations (BIF Regulation ss 10F, 10G). |
| Release dates and recourse notices | Practical completion, the defects period end, the notice given before it, the planned release date, and any notice of intention to have recourse with its service date. |
Questions worth asking
of your own retention records
For a head contractor in WA: does every subcontract above $20,000 entered into since 1 February 2024 point to a retention money trust account?
Section 74 of the WA Act requires the account to be established within 10 business days after the parties enter into the contract, or within 20 business days if the contract comes under Part 4 later, subject to the exclusions in s 70 and reg 12. A subcontract register that holds the account name and the date opened can answer this in one query. General information as read on 2 November 2026, not legal advice.
For a head contractor in NSW: when did each project reach $20 million?
Building Commission NSW states that if value reaches the threshold after the head contract, the rule applies only to contracts entered into after that point. The date the project crossed the line sorts the subcontracts into two groups. General information as read on 2 November 2026, not legal advice.
For a subcontractor in Queensland: do you hold the notice of retention trust and the notice about the end of the defects liability period?
BIF Act s 40 requires notice of the retention trust before the amount is withheld, and QBCC Act s 67NC requires a notice within 10 business days before the defects liability period ends, unless the contracting party is a principal. Those two papers give the dates to diarise. General information as read on 2 November 2026, not legal advice.
For anyone holding security in Victoria or WA: could you produce the notice of intention, its service date and the clauses it relied on?
Victoria s 17H and WA s 57 both require a written notice and at least 5 business days, or a longer contract period, before recourse. General information as read on 2 November 2026, not legal advice.
Questions people ask
about retention money in construction
How long can a contractor hold retention money in Australia?
It depends on the state and the contract. In Queensland, QBCC Act s 67NA releases retention 12 months after practical completion where the contract gives no identifiable period. In Victoria, since 15 April 2026, a term releasing security later than 20 business days after a performance security claim has no effect (s 12(1B)). In WA, a trust can end 2 years after written notice that the money is due (s 69). As read on 2 November 2026; general information, not legal advice.
Does retention money have to be held in trust?
As read on 2 November 2026: yes in NSW for head contractors on projects of $20 million (Building Commission NSW); in WA for contracts above $20,000 entered into from 1 February 2024, with exclusions (s 70, reg 11); in Queensland for cash retention under a withholding contract (BIF Act s 32); and in the NT as an implied term where the contract is silent (s 24). Victoria's, Tasmania's and the ACT's Acts as read contain no retention trust. South Australia is not verified (2 Nov 2026). General information, not legal advice.
What percentage of retention is allowed in construction contracts?
Queensland is the state whose Act read sets numbers: QBCC Act 1991 Part 4A limits retention and security to 5% of the contract price before practical completion, 10% of each payment, and 2.5% after practical completion. Building Commission NSW describes "usually up to 5%" as a practice. As read on 2 November 2026; general information, not legal advice.
What is the difference between a retention bond and retention money?
Retention money is cash held back or paid as security; a retention bond is an instrument from a third party that pays on demand. WA's 2021 Act lets a party obtain release of retention money by substituting a performance bond (s 59). Victoria's 2002 Act treats both as performance security (s 4(1)). As read on 2 November 2026; general information, not legal advice.
What is the retention trust threshold in NSW?
Building Commission NSW states head contractors must hold retention money in a trust account for projects valued at $20 million, under the Building and Construction Industry Security of Payment Regulation 2020. Its pages word this as "over $20m", "$20 million or more" and "at least $20 million". The Regulation's own text was not verified on 2 November 2026. General information, not legal advice.
What this analysis
does and does not show.
Evidence note
- What it shows
- Whether the instruments read and Building Commission NSW's pages, as read on 2 November 2026, require retention money to be held on trust, at what value, what caps apply and how release and recourse work; which changes commenced and which have not.
- Key facts quoted
- NSW $20 million (Building Commission NSW). Qld BIF Act ss 14, 32; QBCC Act ss 67K to 67NC: 5%, 10%, 2.5%, 12 months. WA ss 57, 59, 69 to 74; reg 11: $20,000 from 1 February 2024, $1,000,000 for the prior year. Vic ss 4(1), 12, 17B, 17H. NT s 24, Schedule 1 cl 10. WA Amendment Act No. 16 of 2026, assent 21 October 2026, Part 2 by proclamation.
- South Australia's register blocked automated access on 2 November 2026 and no other official publisher of the Act opened, so its row reads not verified.
- The NSW legislation register blocked automated access on 2 November 2026, so the NSW row rests on Building Commission NSW pages, not on the Regulation. Those pages differ on the wording of the threshold, and on the notice of a new account: 14 days on the Retention money page, 10 business days in the FAQs.
- A public consultation draft of the 2020 Regulation is published on nsw.gov.au. It is not the instrument and was not relied on.
- Queensland's BIF Act s 32(5)(b) refers to a minimum contract price prescribed by regulation. We found no such amount in the Regulation version read, and we make no statement about how that paragraph operates.
- Home building and domestic contract Acts were not surveyed for retention terms, except that Tasmania's Residential Building Work Contracts and Dispute Resolution Act 2016 does not use the word. Contract terms, standard forms, insolvency law and tax were not read.
- Nothing here is legal or financial advice, and it does not determine whether any contract is within a rule, whether any amount may be held or whether recourse is available.
Bring us one subcontract with retention in it.
Send us a subcontract, its claims and the record of what was held. We will show you which rule the record would be read against, and whether your records hold the amount, the account, the statements and the release date.
General information about published legislation and regulator pages only. It is not legal or financial advice and it does not determine whether any contract is within a rule or whether any amount may be held or released. Provisions as read on 2 November 2026 at the versions listed in the sources.
Sources
Suggested citation: state security of payment instruments and Building Commission NSW pages at the versions listed, as read 2 November 2026. Derived figures: the three dollar amounts on the invented $1,000,000 subcontract are our calculation.
- NSW Government (Building Commission NSW) - Retention money: Page modified 6 October 2026 · read 2 November 2026 · Government page
- NSW Government (Building Commission NSW) - Security of payment for construction contractors FAQs: Page modified 26 August 2025 · read 2 November 2026 · Government page
- NSW Government - Legislation administered by Building Commission NSW: As read 2 November 2026 · read 2 November 2026 · Legislation register
- NSW Department of Customer Service - Regulatory Impact Statement: Building and Construction Industry Security of Payment Regulation 2020: June 2020 · read 2 November 2026 · Government page
- Victorian Chief Parliamentary Counsel (Victorian Legislation) - Building and Construction Industry Security of Payment Act 2002: Authorised Version No. 015, incorporating amendments as at 24 June 2026 · read 2 November 2026 · Legislation register
- Queensland Parliamentary Counsel (Queensland Legislation) - Building Industry Fairness (Security of Payment) Act 2017: Current version from 28 April 2026 · read 2 November 2026 · Legislation register
- Queensland Parliamentary Counsel (Queensland Legislation) - Building Industry Fairness (Security of Payment) Regulation 2018: Current version from 1 July 2025 · read 2 November 2026 · Legislation register
- Queensland Parliamentary Counsel (Queensland Legislation) - Queensland Building and Construction Commission Act 1991, Part 4A: Current version from 1 February 2026 · read 2 November 2026 · Legislation register
- Queensland Building and Construction Commission - Retentions and securities: Last reviewed 20 February 2024 · read 2 November 2026 · Government page
- WA Parliamentary Counsel's Office (Western Australian Legislation) - Building and Construction Industry (Security of Payment) Act 2021: As at 21 October 2026, PCO 00-f0-00 · read 2 November 2026 · Legislation register
- WA Parliamentary Counsel's Office (Western Australian Legislation) - Building and Construction Industry (Security of Payment) Regulations 2022: As at 1 July 2026, PCO 00-k0-00 · read 2 November 2026 · Legislation register
- WA Parliamentary Counsel's Office (Western Australian Legislation) - Building and Construction Industry (Security of Payment) Amendment Act 2026: No. 16 of 2026, as passed, as at 21 October 2026 · read 2 November 2026 · Legislation register
- Tasmanian Legislation - Building and Construction Industry Security of Payment Act 2009: Authorised version 14 July 2025, shown as current · read 2 November 2026 · Legislation register
- ACT Legislation Register - Building and Construction Industry (Security of Payment) Act 2009: Republication No 14, effective 6 December 2025 · read 2 November 2026 · Legislation register
- NT Legislation - Construction Contracts (Security of Payments) Act 2004: As in force at 25 May 2024 · read 2 November 2026 · Legislation register
- South Australian Legislation - Building and Construction Industry Security of Payment Act 2009: Not verified (2 Nov 2026): the site blocked automated access · Legislation register
- NSW legislation - Building and Construction Industry Security of Payment Regulation 2020: Not verified (2 Nov 2026): the site blocked automated access · Legislation register
RELATED READING
Other readings on the same records.
- Five states set a 5 business day cooling-off; WA, the ACT and NT none found: When a domestic building contract must be in writing in each state, the cooling-off period and when it starts, and the contents each Act lists. (Contracts & Payments)
- Victoria restricts cost-plus, SA caps the margin, four states set disclosure: Vic: from $1,000,000 estimated cost (contracts from 1 Aug 2017). SA: actual cost plus up to 15%. Qld, Tas: method and estimate. WA: heading and acknowledgment. (Contracts & Payments)
- Seven stars and Livable Housing: the two lists of states do not match: 7 star, Whole-of-Home and Livable Housing Design by state and territory, with transitions, as read on 2 November 2026. (Licensing & Compliance)