{"id":"nsw:sl-2020-0504","name":"Building and Construction Industry Security of Payment Regulation 2020","slug":"building-and-construction-industry-security-of-payment-regulation-2020","collection":"regulation","jurisdiction":"nsw","status":"in_force","isInForce":true,"actNumber":"504 of 2020","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":176454,"registerId":"nsw-nsw:sl-2020-0504-current","compilationNumber":null,"startDate":"2026-04-05","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Part 1","sectionType":"part","heading":"Preliminary","content":"# Part 1 Preliminary\n\nPart 1 Preliminary","sortOrder":0},{"sectionNumber":"1","sectionType":"section","heading":"Name of Regulation","content":"#### 1 Name of Regulation\n\n1 Name of Regulation\n\n> This Regulation is the [Building and Construction Industry Security of Payment Regulation 2020](/view/html/inforce/current/sl-2020-0504).","sortOrder":1},{"sectionNumber":"2","sectionType":"section","heading":"Commencement","content":"#### 2 Commencement\n\n2 Commencement\n\n> > (1) This Regulation commences on 1 September 2020, except as provided by subclause (2), and is required to be published on the NSW legislation website.\n> \n> > (2) Schedule 2 commences on 1 March 2021.\n> \n> Note.\n> \n> This Regulation repeals and replaces the [Building and Construction Industry Security of Payment Regulation 2008](/view/html/repealed/current/sl-2008-0139), which would otherwise be repealed on 1 September 2021 by section 10(2) of the [Subordinate Legislation Act 1989](/view/html/inforce/current/act-1989-146).","sortOrder":2},{"sectionNumber":"3","sectionType":"section","heading":"Definitions","content":"#### 3 Definitions\n\n3 Definitions\n\n> > (1) In this Regulation—\n> > \n> > retention money has the same meaning as in section 12A(5) of the Act.\n> > \n> > Note.\n> > \n> > Money is retention money only while it is held as security for the performance of the subcontractor’s obligations. If the head contractor becomes entitled to money held as retention money, the money ceases to be retention money and the requirement under this Part that the money be held in trust for the subcontractor in a retention money trust account ceases.\n> > \n> > the Act means the [Building and Construction Industry Security of Payment Act 1999](/view/html/inforce/current/act-1999-046).\n> > \n> > Note.\n> > \n> > The Act and the [Interpretation Act 1987](/view/html/inforce/current/act-1987-015) contain definitions and other provisions that affect the interpretation and application of this Regulation.\n> \n> > (1A) For the purposes of paragraph (b) of the definition of exempt residential construction contact in section 4(1) of the Act, an owner occupier construction contract is prescribed.\n> \n> > (2) Notes included in this Regulation do not form part of this Regulation.\n> \n> **cl 3:** Am 2020 (504), Sch 2\\[1\\].","sortOrder":3},{"sectionNumber":"4","sectionType":"section","heading":null,"content":"#### 4\n\n4 (Repealed)","sortOrder":4},{"sectionNumber":"Part 2","sectionType":"part","heading":"Trust accounts for retention money","content":"# Part 2 Trust accounts for retention money\n\nPart 2 Trust accounts for retention money","sortOrder":6},{"sectionNumber":"Division 1","sectionType":"division","heading":"Preliminary","content":"## Division 1 Preliminary\n\nDivision 1 Preliminary","sortOrder":7},{"sectionNumber":"5","sectionType":"section","heading":"Definitions","content":"#### 5 Definitions\n\n5 Definitions\n\n> In this Part—\n> \n> approved ADI means an authorised deposit-taking institution approved under section 87 of the [Property and Stock Agents Act 2002](/view/html/inforce/current/act-2002-066) or approved by the Secretary by order in writing.\n> \n> retention money trust account—see clause 8(1)(b).","sortOrder":8},{"sectionNumber":"6","sectionType":"section","heading":"Application of Part—contracts with value of at least $20 million","content":"#### 6 Application of Part—contracts with value of at least $20 million\n\n6 Application of Part—contracts with value of at least $20 million\n\n> > (1) This Part applies to a head contractor if the head contractor’s construction contract with the principal (the main contract) has a value of at least $20 million (the $20 million threshold).\n> \n> > (2) The value of a construction contract is—\n> > \n> > > (a) the amount of the consideration that the contract provides is payable for construction work carried out under the contract or for related goods and services supplied under the contract, or\n> > \n> > > (b) if the contract does not provide for that amount—the market value of the work to be carried out or the value of the goods and services to be supplied.\n> \n> > (3) The value of a construction contract is its value including any variation to the contract after the contract is entered into, with the result that the value of the main contract can increase and reach the $20 million threshold after the main contract is first entered into.\n> \n> > (4) If the value of the main contract reaches the $20 million threshold after the main contract was first entered into, the head contractor becomes subject to this Part but only for construction contracts between the head contractor and subcontractors entered into after the value of the main contract reached the $20 million threshold.","sortOrder":9},{"sectionNumber":"7","sectionType":"section","heading":"Executive liability offences","content":"#### 7 Executive liability offences\n\n7 Executive liability offences\n\n> Section 34D of the Act applies to an offence against clause 8(1) or (2), 10, 13, 14 or 16.\n> \n> Note.\n> \n> Section 34D of the Act provides for the personal liability of directors for certain offences committed by a corporation.","sortOrder":10},{"sectionNumber":"Division 2","sectionType":"division","heading":"Trust account requirements","content":"## Division 2 Trust account requirements\n\nDivision 2 Trust account requirements","sortOrder":11},{"sectionNumber":"8","sectionType":"section","heading":"Retention money to be held in trust account","content":"#### 8 Retention money to be held in trust account\n\n8 Retention money to be held in trust account\n\n> > (1) A head contractor to whom this Part applies must—\n> > \n> > > (a) hold the retention money in trust for the subcontractor entitled to the money, and\n> > \n> > > (b) ensure that the money is paid into and retained in a trust account established with an approved ADI (a retention money trust account).\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.\n> \n> > (2) A head contractor must ensure that the money is paid into the retention money trust account as soon as possible, but no later than 5 business days after the head contractor is required to retain the retention money.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.\n> \n> > (3) A retention money trust account may be established as—\n> > \n> > > (a) a separate trust account for the retention money held in respect of a particular subcontractor, or\n> > \n> > > (b) a separate trust account for all retention money held in connection with a particular construction contract of the head contractor, or\n> > \n> > > (c) a separate trust account for all retention money held in connection with 2 or more (or all) construction contracts of the head contractor.","sortOrder":12},{"sectionNumber":"9","sectionType":"section","heading":"Requirements for establishment of trust account","content":"#### 9 Requirements for establishment of trust account\n\n9 Requirements for establishment of trust account\n\n> > (1) A head contractor who establishes a retention money trust account must ensure that the name of the account and the description of the account in the records of the head contractor include the name of the head contractor and the words “Trust Account”.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.\n> \n> > (2) When establishing a retention money trust account with an approved ADI, a head contractor must ensure that the approved ADI is notified in writing that the account is a trust account required to be established for the purposes of this Part.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.\n> \n> > (3) A head contractor must, within 10 business days after establishing a retention money trust account, notify the Secretary in writing of the following—\n> > \n> > > (a) the name of the approved ADI and the branch or BSB number of the branch of the approved ADI at which the account has been established,\n> > \n> > > (b) the name of the account,\n> > \n> > > (c) the number of the account,\n> > \n> > > (d) the opening balance of the account,\n> > \n> > > (e) the date the account was opened.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.","sortOrder":13},{"sectionNumber":"10","sectionType":"section","heading":"Withdrawals from trust account","content":"#### 10 Withdrawals from trust account\n\n10 Withdrawals from trust account\n\n> > (1) A head contractor must not withdraw retention money from a retention money trust account except—\n> > \n> > > (a) for the purpose of the payment of the money in accordance with the terms of the construction contract under which the money was retained by the head contractor, or\n> > \n> > > (b) as may be agreed in writing by the head contractor and the subcontractor concerned, or\n> > \n> > > (c) for the purpose of the payment of the adjudicated amount that the head contractor is required to pay under section 23 of the Act, or\n> > \n> > > (d) in accordance with an order of a court or tribunal.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.\n> \n> > (2) A head contractor must not withdraw retention money from a retention money trust account otherwise than by cheque or electronic funds transfer.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.","sortOrder":14},{"sectionNumber":"11","sectionType":"section","heading":"Interest earned on trust account","content":"#### 11 Interest earned on trust account\n\n11 Interest earned on trust account\n\n> Interest earned on retention money held in a retention money trust account is to be held on the same trust as the retention money and dealt with accordingly unless—\n> \n> > (a) the contract between the head contractor and the subcontractor under which the money is held as retention money otherwise provides, or\n> \n> > (b) the head contractor and subcontractor otherwise agree in writing.","sortOrder":15},{"sectionNumber":"12","sectionType":"section","heading":"Retention money not available to pay head contractor’s debts","content":"#### 12 Retention money not available to pay head contractor’s debts\n\n12 Retention money not available to pay head contractor’s debts\n\n> > (1) Retention money held by a head contractor is not available for the payment of the debts of the head contractor, or liable to be attached or taken in execution for satisfying a judgment against the head contractor.\n> \n> > (2) This clause does not take away or affect any just claim that a head contractor may have against or upon retention money.","sortOrder":16},{"sectionNumber":"13","sectionType":"section","heading":"Overdrawn trust account","content":"#### 13 Overdrawn trust account\n\n13 Overdrawn trust account\n\n> A head contractor must, within 5 business days after becoming aware that a retention money trust account of the head contractor has become overdrawn, notify the Secretary in writing of—\n> \n> > (a) the name and number of the account, and\n> \n> > (b) the amount by which the account is overdrawn, and\n> \n> > (c) the reason for the account becoming overdrawn.\n> \n> Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.","sortOrder":17},{"sectionNumber":"14","sectionType":"section","heading":"Closure of trust account","content":"#### 14 Closure of trust account\n\n14 Closure of trust account\n\n> A head contractor must, within 10 business days after closing a retention money trust account, notify the Secretary of the closure in writing.\n> \n> Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.","sortOrder":18},{"sectionNumber":"15","sectionType":"section","heading":"Financial institutions not subject to certain obligations and liabilities","content":"#### 15 Financial institutions not subject to certain obligations and liabilities\n\n15 Financial institutions not subject to certain obligations and liabilities\n\n> > (1) An approved ADI with which a retention money trust account is established by a head contractor under this Part—\n> > \n> > > (a) is not under any obligation to control or supervise transactions in relation to the account or to see to the application of money disbursed from the account, and\n> > \n> > > (b) does not have, in relation to any liability of the head contractor to the approved ADI, any recourse or right (whether by way of set-off, counterclaim, charge or otherwise) against money in the account.\n> \n> > (2) Subclause (1) does not relieve an approved ADI from any liability to which it is subject apart from this Part.","sortOrder":19},{"sectionNumber":"16","sectionType":"section","heading":"Trust account records","content":"#### 16 Trust account records\n\n16 Trust account records\n\n> > (1) A head contractor must keep records in relation to a retention money trust account established by the head contractor showing the amounts deposited into or withdrawn from the account.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.\n> \n> > (2) A head contractor must keep a separate ledger for retention money held in respect of each subcontractor in connection with each construction contract.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.\n> \n> > (3) The ledger must contain the following information—\n> > \n> > > (a) the amounts deposited into or withdrawn from the retention money trust account in respect of the subcontractor,\n> > \n> > > (b) the date of each transaction,\n> > \n> > > (c) the balance after each transaction.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.\n> \n> > (4) A head contractor must provide the subcontractor concerned with a copy of the ledger—\n> > \n> > > (a) at least once every 3 months, or\n> > \n> > > (b) as often as may be agreed in writing by the head contractor and the subcontractor (but at least once every 6 months).\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.\n> \n> > (5) A head contractor must retain a record made in relation to a retention money trust account for the purposes of this clause for not less than 3 years after the account is closed.\n> > \n> > Maximum penalty—In the case of a corporation, 1,000 penalty units or, in any other case, 200 penalty units.","sortOrder":20},{"sectionNumber":"Part 3","sectionType":"part","heading":"Miscellaneous","content":"# Part 3 Miscellaneous\n\nPart 3 Miscellaneous","sortOrder":21},{"sectionNumber":"17","sectionType":"section","heading":"Recognised financial institutions","content":"#### 17 Recognised financial institutions\n\n17 Recognised financial institutions\n\n> Each person or body that is a body regulated by APRA, within the meaning of the [Australian Prudential Regulation Authority Act 1998](http://www.legislation.gov.au/) of the Commonwealth, is prescribed for the purposes of the definition of recognised financial institution in section 4(1) of the Act.","sortOrder":22},{"sectionNumber":"18","sectionType":"section","heading":"Supporting statements","content":"#### 18 Supporting statements\n\n18 Supporting statements\n\n> The requirement for a head contractor to provide a supporting statement under section 13(7) of the Act relates only to those subcontractors or suppliers directly engaged by the head contractor.","sortOrder":23},{"sectionNumber":"19","sectionType":"section","heading":"Adjudicator eligibility","content":"#### 19 Adjudicator eligibility\n\n19 Adjudicator eligibility\n\n> > (1) For the purposes of section 18(1)(b) of the Act, a person is eligible to be an adjudicator in relation to a construction contract if the person has—\n> > \n> > > (a) a degree or diploma in architecture, building surveying, quantity surveying, building and construction, construction management, project management, engineering or law conferred by an Australian or foreign university or tertiary institution and at least 5 years of relevant experience, or\n> > \n> > > (b) at least 10 years of relevant experience.\n> \n> > (2) For the purposes of section 18(2)(b) of the Act, a person is not eligible to be an adjudicator in relation to a particular construction contract if—\n> > \n> > > (a) the person has not completed the required continuing professional development, or\n> > \n> > > (b) a reasonable person would conclude the person has an actual or perceived conflict or would not adjudicate impartially.\n> \n> > (3) Subclause (2)(a) does not apply until 1 September 2021.\n> \n> > (4) In this clause—\n> > \n> > relevant experience means experience in—\n> > \n> > > (a) the management and administration of construction contracts, or\n> > \n> > > (b) the resolution of disputes in connection with construction contracts.\n> > \n> > required continuing professional development means the continuing professional development required to be completed each year as specified by the Secretary in the CPD Guidelines for Adjudicators published on the Department of Customer Service’s website on 13 August 2020.","sortOrder":24},{"sectionNumber":"20","sectionType":"section","heading":"Authorisation of nominating authorities","content":"#### 20 Authorisation of nominating authorities\n\n20 Authorisation of nominating authorities\n\n> > (1) An authority given by the Minister to an applicant under section 28 of the Act remains in force for a period of 5 years, unless sooner withdrawn by the Minister under the Act.\n> \n> > (2) An existing authority that was, immediately before 1 September 2020, in force remains in force for a period of 5 years from 1 September 2020, unless sooner withdrawn by the Minister under the Act.","sortOrder":25},{"sectionNumber":"20A","sectionType":"section","heading":"Trust account annual report—financial year commencing 1 July 2019","content":"#### 20A Trust account annual report—financial year commencing 1 July 2019\n\n20A Trust account annual report—financial year commencing 1 July 2019\n\n> > (1) A head contractor who operated a retention money trust account during the financial year commencing on 1 July 2019 must, within 6 months of the day on which this clause commences, provide the Secretary with the following in relation to the financial year—\n> > \n> > > (a) an account review report for the account,\n> > \n> > > (b) a retention money trust account statement for the account, in the form approved by the Secretary.\n> > \n> > Maximum penalty—200 penalty units.\n> \n> > (2) Subclause (1) does not apply to a head contractor if—\n> > \n> > > (a) there have been no amounts deposited into or withdrawn from the retention money trust account during the financial year, and\n> > \n> > > (b) no amount is retained in the account at the end of the financial year, and\n> > \n> > > (c) the contractor has, within 6 months of the day on which this clause commences, given the Secretary written notice of the facts mentioned in paragraphs (a) and (b).\n> \n> > (3) A fee of $1,500 must accompany an account review report and retention money trust account statement provided to the Secretary for the purposes of this clause.\n> \n> > (4) This clause does not apply to a head contractor who has—\n> > \n> > > (a) complied with clause 16 of the repealed Regulation in relation to the financial year, or\n> > \n> > > (b) otherwise complied, before the commencement of this clause, with subclauses (1) and (3) in relation to the financial year.\n> \n> > (5) A head contractor must not provide a retention money trust account statement to the Secretary for the purposes of this clause knowing the statement is false or misleading in a material particular.\n> > \n> > Maximum penalty—200 penalty units.\n> \n> > (6) In this clause—\n> > \n> > account review report, for a retention money trust account, means a report given by a registered company auditor certifying that, based on a review of the operation of the account, in the auditor’s opinion the account operator has complied with all of the requirements of Part 2 of the repealed Regulation in relation to the account during the financial year.\n> > \n> > financial year means a period of 12 months commencing on 1 July.\n> > \n> > registered company auditor has the same meaning as in the [Corporations Act 2001](http://www.legislation.gov.au/) of the Commonwealth.\n> > \n> > repealed Regulation means the [Building and Construction Industry Security of Payment Regulation 2008](/view/html/repealed/current/sl-2008-0139), as in force immediately before 1 September 2020.\n> > \n> > retention money trust account has the same meaning as in Part 2.\n> \n> **cl 20A:** Ins 2020 (714), Sch 1\\[1\\].","sortOrder":26},{"sectionNumber":"21","sectionType":"section","heading":"Repeal and savings","content":"#### 21 Repeal and savings\n\n21 Repeal and savings\n\n> > (1) The [Building and Construction Industry Security of Payment Regulation 2008](/view/html/repealed/current/sl-2008-0139) (the repealed Regulation) is repealed.\n> \n> > (2) Any act, matter or thing that, immediately before the repeal of the repealed Regulation, had effect under the repealed Regulation continues to have effect under this Regulation.\n> \n> > (3) Despite subclause (2), clause 16 of the repealed Regulation, as in force immediately before 1 September 2020, does not apply with respect to the financial year commencing on 1 July 2019.","sortOrder":27},{"sectionNumber":"Schedule 1","sectionType":"schedule","heading":"Penalty notice offences","content":"# Schedule 1 Penalty notice offences\n\nSchedule 1 Penalty notice offences\n\n| Column 1 | Column 2 | Column 3 |\n| Provision | Penalty for an individual | Penalty for a corporation |\n| Offences under the Act |\n| Section 13(7) | $2,200 | $11,000 |\n| Section 26A(5) | $1,100 | $5,500 |\n| Section 26B(5) | $1,100 | $5,500 |\n| Section 26D(3) | $1,100 | $5,500 |\n| Section 26E(2) | $1,100 | $5,500 |\n| Offences under this Regulation |\n| Clause 8(1) | $2,200 | $11,000 |\n| Clause 9(3) | $2,200 | $11,000 |\n| Clause 10(1) or (2) | $2,200 | $11,000 |\n| Clause 14 | $2,200 | $11,000 |\n| Clause 16(1) or (5) | $2,200 | $11,000 |\n| Clause 20A(1) | $4,400 | $4,400 |\n\n**sch 1:** Am 2020 (714), Sch 1\\[2\\].","sortOrder":28},{"sectionNumber":"sch.1-sec","sectionType":"section","heading":"Application of Schedule","content":"#### sch.1-sec Application of Schedule\n\nApplication of Schedule\n\n> > (1) For the purposes of section 34B of the Act—\n> > \n> > > (a) each offence created by a provision specified in this Schedule is an offence for which a penalty notice may be issued, and\n> > \n> > > (b) the amount payable for the penalty notice is the amount specified opposite the provision.\n> \n> > (2) If the provision is qualified by words that restrict its operation to limited kinds of offences or to offences committed in limited circumstances, the penalty notice may be issued only for—\n> > \n> > > (a) that limited kind of offence, or\n> > \n> > > (b) an offence committed in those limited circumstances.","sortOrder":29},{"sectionNumber":"Schedule 2","sectionType":"schedule","heading":"Amendment of Building and Construction Industry Security of Payment Regulation 2020 commencing on 1 March 2021","content":"# Schedule 2 Amendment of Building and Construction Industry Security of Payment Regulation 2020 commencing on 1 March 2021\n\nSchedule 2 Amendment of [Building and Construction Industry Security of Payment Regulation 2020](/view/html/inforce/current/sl-2020-0504) commencing on 1 March 2021","sortOrder":30}],"analysis":{"kimi_summary":{"_metrics":{"source":"grok-batch-everything"},"content_quality":"ok","complexity_score":7,"scope_assessment":{"changed":true,"description":"The 2020 Regulation has expanded beyond the 2008 version it repeals by introducing a new Part 2 that imposes comprehensive retention money trust account obligations on head contractors once the $20 million contract value threshold is met (including post-execution increases), detailed record-keeping and quarterly ledger provision requirements, updated adjudicator eligibility that adds mandatory continuing professional development, prescription of owner-occupier contracts as exempt residential construction contracts, and new annual reporting obligations for the 2019 financial year under clause 20A. These changes broaden the regulatory oversight of payment security mechanisms and extend administrative burdens on larger contractors."},"complexity_factors":["Detailed operational rules across 21 clauses and two schedules covering trust account establishment, withdrawals, notifications, ledgers and closure with strict timelines (e.g. 5 business days, 10 business days)","Multiple cross-references to the Building and Construction Industry Security of Payment Act 1999 (including ss 4(1), 12A(5), 13(7), 18(1)(b), 18(2)(b), 23, 28, 34B and 34D) plus the Property and Stock Agents Act 2002, Interpretation Act 1987, Australian Prudential Regulation Authority Act 1998 and Corporations Act 2001","Layered definitions (retention money, approved ADI, retention money trust account, relevant experience, required continuing professional development) and conditional application based on contract value thresholds that can be reached post-execution","Executive liability provisions, transitional clauses, savings provisions, a dedicated penalty notice schedule with differentiated individual/corporate amounts, and a repealed-regulation savings clause with specific carve-outs for 2019 financial year reporting"],"plain_english_summary":"**This regulation protects subcontractors by requiring large head contractors to safely hold back payments.**\n\nIn simple terms, when a main builder (head contractor) is allowed to keep some money from a subcontractor as a guarantee that the work will be finished properly, that money is called 'retention money'. For big projects worth $20 million or more, the head contractor must put this money into a special bank trust account. The rules explain exactly how to open the account, what records to keep, when the money can be released, and what to do if the account goes overdrawn. The money cannot be used to pay the head contractor's other bills.\n\nThe regulation also sets out who is qualified to be an independent decision-maker (adjudicator) in payment disputes, what extra statements head contractors must give when claiming payment, and lists the fines for breaking the rules. It applies across New South Wales construction contracts and updates an earlier 2008 version to give subcontractors better protection. This matters because it reduces the risk that subcontractors will lose money if a head contractor gets into financial trouble."},"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":true,"description":"Compared with the repealed 2008 Regulation the 2020 Regulation repeals the old instrument while preserving continuing effects (clause 21(1)–(2)). The new Regulation (a) creates a trust-account regime targeted at head contractors whose main contract value is at least $20 million, including a timing rule that captures contracts and subcontracting entered after the threshold is reached (clause 6); (b) prescribes detailed administrative and record-keeping duties, notifications to the Secretary, and penalties for non-compliance (clauses 8–16, Schedule 1); (c) adds a transitional reporting requirement and fee for retention accounts that operated in the 2019–20 financial year (clause 20A); and (d) inserts a prescription about owner‑occupier construction contracts and removes the prior clause on that matter via Schedule 2 (Schedule 2 items). Clause 21(3) specifically excludes application of one clause of the repealed Regulation for the 2019–20 year, so the practical scope for that year is altered (clause 21(3)). These textual changes adjust which projects and which time periods are covered and add new compliance and reporting obligations for affected head contractors."},"complexity_factors":["Value-threshold rule with retrospective application to contracts that reach $20 million after formation (clause 6)","Multiple procedural requirements and time limits for account setup, notification and reporting (clauses 9, 13, 14, 20A)","Detailed per-subcontractor ledger and disclosure obligations with retention periods (clause 16)","Interaction with other laws and delegated instruments (Act provisions, Property and Stock Agents Act approval of ADIs, Secretary’s CPD Guidelines) (clauses 5, 19)","Varied enforcement tools: penalty units in primary clauses, fixed penalty-notice amounts in Schedule 1, and application of executive liability under the Act (clause 7, Schedule 1)","Operational choice for account structure (per subcontractor, per contract, aggregated) with different administrative and cost consequences (clause 8(3))","Special transitional/reporting measure for the 2019–20 financial year including a statutory fee and auditor review requirement (clause 20A)"],"plain_english_summary":"What this Regulation does (mechanics)\n\n- Requires head contractors on large projects to hold subcontractors' retention money in a trust account at an approved bank or other authorised deposit-taking institution (retention money trust account) (clauses 5, 6, 8).\n- Applies that trust-account requirement to a head contractor whose main contract with the principal has a value of at least $20 million; the threshold is assessed by the contract consideration or market value and can be reached after the contract is entered into (clause 6).\n- Sets detailed rules about how those trust accounts must be opened, named, notified to the Secretary, and used; limits withdrawals to contract-authorised payments, written agreement with the subcontractor, adjudicated amounts under the Act, or court orders; and forbids cash withdrawals (clauses 9–10).\n- Requires ledgers and records for each subcontractor, periodic provision of ledger copies to subcontractors, retention of records for 3 years after account closure, and notifications for account closure or if the account is overdrawn (clauses 13, 14, 16).\n- States that interest on retention money is held on the same trust unless the contract or parties agree otherwise, and prevents retention money from being used to pay the head contractor’s creditors (clauses 11–12).\n- Clarifies that an approved ADI (bank) is not obliged to supervise how trust-account money is applied and cannot use the trust money to set off the head contractor’s debts to the ADI (clause 15).\n- Prescribes which financial bodies count as recognised financial institutions for the parent Act (clause 17).\n- Limits the head-contractor supporting-statement obligation under the Act to subcontractors and suppliers directly engaged by the head contractor (clause 18).\n- Sets minimum qualifications and experience for adjudicators, and a continuing professional development requirement (clause 19).\n- Fixes the term of a Ministerial authority for nominating authorities at 5 years (clause 20).\n- Requires a retrospective annual report and an approved-form statement for retention accounts that operated in the 2019–20 financial year, with a $1,500 fee (clause 20A).\n- Repeals the 2008 Regulation but preserves existing effects unless specifically displaced; however clause 16 of the repealed Regulation does not apply for the 2019–20 year (clause 21).\n- Makes a range of contraventions penalty-notice offences with fixed penalty amounts for individuals and corporations (Schedule 1).\n\nWho this affects and who decides\n\n- Primary duty-bearers: head contractors on construction contracts where the main contract value meets or later reaches $20 million (clause 6). Head contractors must open and operate the trust accounts, keep ledgers, provide notices, and pay filing/report fees where required (clauses 8–16, 20A).\n- Beneficiaries: subcontractors and suppliers whose retention money must be held on trust for them while retained (clause 8 and definition in clause 3).\n- Banks and ADIs: may be used as the account operator; they are not required by the Regulation to supervise account transactions and cannot exercise recourse against trust money for their commercial claims against the head contractor (clause 15).\n- Administrative decision-makers: the Secretary receives notifications about accounts and approves CPD requirements for adjudicators via published guidelines; the Minister issues and withdraws authorisations for nominating authorities (clauses 9, 19, 20).\n- Adjudicators: subject to eligibility rules and CPD requirements specified in the Regulation (clause 19).\n\nWhy it matters (stated purposes and practical effects)\n\n- The Regulation implements a targeted trust-account regime for retention money on larger projects to ensure retention funds are ring-fenced for subcontractors while they are held. The text sets out how that ring-fencing must be achieved (clauses 6–12).\n\nTesting those purpose-claims against costs, incentives and trade-offs (source-grounded)\n\n- Compliance costs and administrative burden on head contractors: opening named trust accounts, notifying the Secretary within 10 business days (clause 9(3)), keeping per-subcontractor ledgers, providing ledger copies at least quarterly (clause 16), and retaining records for 3 years after closure (clause 16(5)). These are explicit, recurring administrative tasks and carry maximum statutory penalties if not met (clauses 9, 16; Schedule 1).\n\n- Direct financial costs: a one-off $1,500 fee must accompany the retrospective account review report and statement for the 2019–20 financial year where applicable (clause 20A(3)). Penalties for breaches are expressed as penalty units in many clauses (clauses 8–10, 13–16) and fixed penalty-notice amounts for specified offences are set out in Schedule 1.\n\n- Incentive effects on behaviour and private contracting choices: by making retention money trust-held and unavailable to satisfy the head contractor’s creditors (clause 12), the Regulation changes the liquidity treatment of retention money and constrains head contractors from using retained funds for other business needs. That creates an incentive for head contractors to manage cash flow differently (clause 12) and may influence contract terms (clauses 8–11).\n\n- Bank/ADI behaviour and market effects: approved ADIs are not required to monitor how trust money is applied and cannot recoup their own claims against money in the trust account (clause 15). That reduces the operational burden on banks but also means subcontractors rely on statutory trust protection rather than bank oversight for the security of those funds.\n\n- Administrative discretion and compliance risk: the Secretary has formal roles (notification recipient, publisher of CPD Guidelines referenced in clause 19) and the Minister retains power to withdraw authorisations for nominating authorities (clauses 9, 19, 20). The Regulation leaves some implementation detail to Secretary-issued CPD Guidelines and to the approved ADI approval process in another Act (clauses 5, 19).\n\n- Transitional and scope effects: the trust-account requirement applies only once the main contract reaches the $20 million threshold; if that occurs after contract formation, only subcontracting contracts entered after the threshold is reached are caught (clause 6(4)). That creates a timing-based compliance boundary and potential strategic behaviour around variations and subcontract timing.\n\n- Enforcement and personal liability: offences attract corporate and individual penalties; the Regulation expressly subjects certain offences to executive liability (personal liability) under section 34D of the Act (clause 7) and creates specific penalty-notice offences (Schedule 1).\n\nKey practical points to watch in implementation\n\n- Whether head contractors will establish multiple separate trust accounts (per subcontractor, per contract, or across contracts) as allowed (clause 8(3)) and how that choice affects ledger-keeping and bank fees.\n- The administrative workload of regular ledger provision to subcontractors and notifications to the Secretary (clauses 9, 13, 14, 16).\n- Interaction with the Act’s adjudication process where adjudicated amounts must be paid from the trust (clause 10(1)(c) cross-refers to section 23 of the Act).\n\nSelected clause references: 5–16 (trust-account regime); 6 (scope threshold); 7 (executive liability); 9 (establishment and notification); 10 (withdrawals); 11–12 (interest and protection from creditors); 13–16 (notifications, records); 17–20A (miscellaneous and reporting); Schedule 1 (penalty-notice amounts)."},"summary":{"complexity_score":4,"scope_assessment":{"changed":false,"description":"Based on the available metadata, the regulation appears to maintain its original scope as a supporting instrument for the Security of Payment Act. The amendments visible in the timeline (August 2020, December 2020, March 2021) reflect standard refinements rather than any fundamental expansion or contraction of the regulation's purpose or coverage."},"complexity_factors":["Operates as subordinate legislation under a parent Act, meaning full understanding requires reading both documents together","Interacts with a broader statutory scheme involving adjudication processes, payment claims, and payment schedules with specific procedural requirements","Staged repeal mechanism under the Subordinate Legislation Act 1989 adds a layer of temporal uncertainty","Multiple point-in-time versions exist, meaning the applicable rules may differ depending on when a dispute arose","Construction industry context involves multiple contract layers (head contractors, subcontractors, sub-subcontractors) making application situationally complex"],"plain_english_summary":"## Building and Construction Industry Security of Payment Regulation 2020 (NSW)\n\n**What is this?**\nThis is a NSW government regulation (a set of detailed rules made under a broader law) that supports the *Building and Construction Industry Security of Payment Act 1999*. That Act exists to make sure subcontractors, builders, and suppliers in the construction industry actually get paid for work they've done — a longstanding problem in the industry where payment disputes and delayed payments can cripple small businesses.\n\n**Who does it affect?**\n- **Builders, subcontractors, and tradies** working on NSW construction projects\n- **Developers and head contractors** who engage those workers\n- **Suppliers** of construction-related goods and services\n\n**Why does it matter?**\nThe construction industry has a history of 'principal contractors' (the main builders) delaying or withholding payment from smaller subcontractors. This regulation sets out the specific procedural rules — such as timeframes, forms, and processes — for making and responding to payment claims, and for accessing rapid dispute resolution (called 'adjudication') when payments are disputed.\n\n**Important note:** This regulation is scheduled to be **automatically repealed (cancelled) on 1 September 2026** under NSW's standard process for reviewing subordinate legislation. This doesn't necessarily mean the underlying protections disappear — a new regulation would typically be made to replace it — but it's worth watching if you rely on it.\n\n**In plain terms:** If you do building work in NSW and someone won't pay you, this regulation is part of the rulebook that gives you a fast, relatively cheap way to recover what you're owed without going to court."},"issue_detection":{"absurdities":[],"contradictions":[]}},"importantCases":[],"_links":{"self":"/api/acts/building-and-construction-industry-security-of-payment-regulation-2020","history":"/api/acts/building-and-construction-industry-security-of-payment-regulation-2020/history","analysis":"/api/acts/building-and-construction-industry-security-of-payment-regulation-2020/analysis","conflicts":"/api/acts/building-and-construction-industry-security-of-payment-regulation-2020/conflicts","importantCases":"/api/acts/building-and-construction-industry-security-of-payment-regulation-2020/important-cases","documents":"/api/acts/building-and-construction-industry-security-of-payment-regulation-2020/documents"}}