School Property Projects and Retentions

Following the new legislation effective 5.10.23, we thought the following might be helpful to share.

For property projects $100,000 to $1,000,000 excl GST, schools are required to open a separate bank account with a separate suffix to pay their retention funds into. This does not need to be an actual trust account, it just needs a separate suffix from the school's other accounts.

If you have multiple projects you just need to clearly identify, on each retention amount transferred to this account, what project that transfer relates to. You don’t need a separate bank account for each project.

When your main contractor invoices you (from 5.10.23) their invoice should identify the retention amount on that invoice. That retention amount then needs to be transferred to that new bank account and paid to the contractor once the Final Completion Certificate is issued.

The percentage to be retained is based on;

• 5% on the first $200k
• 2.5% on the next $800k

Therefore, up to $30,000 retention is held for each project.