Specifically for licensee´s trust accounts under the Property Agents and Motor Dealers Act 2000 (the Act) and the Property Agents and Motor Dealers Regulation 2001 (the Regulation)
A trust account is a bank account where you can hold money on behalf of another person.
There are two types of trust accounts:
General Trust Account:
For use by licensees including real estate agents, resident letting agents, auctioneers, pastoral house agents and commercial agents. Must be used for:
- deposits on sales
- residential bonds received by a licensee
- prepaid amounts (eg advertising)
- amounts received on behalf of another person.
Special Trust Account:
Under Section 380 of the Act, a special trust account is used for investing amounts that are to be held in trust for a sale that is to be completed more than 60 days after the amount is received. All parties to the sale must direct that the amount be invested.
You can only operate a trust account if you hold an appropriate licence.
You need to use a trust account if you receive an amount for the following reasons including:
- money received with a direction for use from a client. This is money paid in advance to the agent with a letter authorising them to use it for specific purposes, such as advertising, marketing expenses and searches
- money from property sales (including deposits) and property rentals
- money from consignment sales.
Reconciling trust records and payments to trust creditors
Information regarding trust account cash book reconciliations and payments to owners is contained within the relevant legislation. This includes the Property Agents and Motor Dealers Act 2000 (the Act) and the Property Agents and Motor Dealers Regulation 2001 (the Regulations).
Licensees using trust accounting software will generally combine reconciliation and disbursement processes when performing their "end of month" procedures. This may result in the licensee not reconciling in accordance with the legislation or not paying owners in accordance with their instructions.
It is recommended that licensees familiarise themselves with the capabilities of the software they use so the following can be done independently:
- calculation of amounts and disbursement to owners at the date(s) agreed in appointment forms;
- reconcile the trust records in accordance with the Regulations.
Payments to trust creditors including disbursement to owners
Trust creditors must be paid in accordance with the legislation (Sections 384, 385 & 386 of the Act) and the appointment form (for example PAMD Form 20a), unless otherwise requested in writing (Section 385(4) of the Act).
An amount paid to a licensee´s trust account must be kept in the account until it is paid out under the Act. Failure to do so can lead to the maximum penalty of 200 units ($22,000) or 3 years imprisonment.
The timing of payments to owners, as agreed in the appointment documentation, may not coincide with the end of the month.
The appointment form must state-
- the service to be performed by the letting agent and how it is to be performed; and
- when the fees, charges and commission for the service become payable.
For more information please consult the Act.
Licensees must perform their trust account cash book reconciliation in accordance with Regulation 47. This requires that reconciliations must be performed after the end of the month using the bank statement balance at the end of the month.
A principal licensee must, within 5 business days after the end of each month-
- reconcile the monthly trust account cash book balance with the trust account ledger balances (i.e. trial balances) at the end of the month; and
- reconcile the financial institution´s monthly statement balance (i.e. reconciled trust account bank statement balance) with the trust account cash book balance at the end of the month.
The reconciliation must contain the balance of the financial institution statement balance at the end of the month. Failure to do so can lead to the maximum penalty of 10 units ($1,100).
For more information concerning reconciliations please consult the Regulations.
Reconciliations must be performed in accordance with Regulation 47.
Payments to trust creditors must be disbursed in accordance with the Act and in accordance with terms agreed to in the appointment.
Opening, closing or changing a trust account
Section 375 of the Act requires the licensee to present a copy of their current licence to an approved financial institution within Queensland to open a trust account or special trust account.
In accordance with Section 377 of the Act, you must notify us using Form 19 within 14 days if you:
- open a general trust account or special trust account
- change the name of a general trust account or special trust account
- close a general trust account or special trust account.
You can only open a general trust account in a company name if your corporation holds a current licence issued under the Act.
As per Section 376 of the Act, the title of a trust account must include the following:
- licensee name(s)
- the words ´trust account´ or ´special trust account´.
You can only open a general trust account or a special trust account at an approved financial institution in Queensland (listed below).
Approved financial institutions
- Australia & New Zealand Banking Group
- Bank of Queensland Limited
- Bank of Western Australia Ltd
- Bendigo Bank Limited
- Capricornia Credit Union
- Commonwealth Bank of Australia
- Heritage Building Society
- HSBC Bank Australia Limited
- Macquarie Bank Limited
- National Australia Bank Limited
- Queensland Country Credit Union
- The Rock Building Society Limited
- St. George Bank Limited
- Suncorp-Metway Ltd
- Westpac Banking Corporation
Trust accounts factsheet
To assist approved financial instituitions when establishing a trust account under the Act.
Issuing trust account receipts (Regulation 42)
You must issue a receipt as soon as you receive trust money in the form of cash or cheque. However, for trust money received by way of credit card or electronic funds transfer, you must issue a receipt as soon as you become aware that you have received the amount. You only need to provide a receipt if requested to do so. Under the Act you must only use a receipt that is titled 'Property Agents and Motor Dealers Act 2000 - Trust Account Receipt'.
The receipt contains (Regulation 41) the:
- licensee's name (where there is a corporate licence, the corporation´s name must appear on the receipt,)
- receipt date
- name of person on whose behalf you completed the receipt
- name of person on whose behalf you received the money
- brief description of the transaction/matter for which you received money
- amount received in numerals
- how you received the money, e.g. cash, cheque, credit card, electronic transfer
- signature of the person completing the receipt.
If the person paying the money is different from the person on the contract of sale, make the receipt out to the person paying the money. However, include a note that the payment was made on behalf of the names on the contract of sale.
Withdrawing amounts from a trust account
You can only withdraw money, including transaction expenses, fees, charges and commissions detailed in the ´Appointment to act´ in accordance with Sections 384 and 385 of the Act if:
- the licensee is authorised to draw expenses when they become payable
- when the transaction is finalised, the licensee pays the balance of trust money (less commission) to the person entitled to the amount
- the licensee withdraws what is left in the account, being authorised expenses and commission.
You can also withdraw it once the transaction is finalised, e.g. when the contract for a sale has been settled or terminated.
If you cannot find the beneficiaries of money held in a trust account, contact the Public Trustee.
Making electronic funds transfers
Distribute all trust money directly from the trust account. It is illegal to transfer money to recipients via a general trading account.
Keeping trust account records in accordance with Regulations 38 and 58
Keep your trust account records for five years. These records include:
- a register of trust account receipt forms
- consecutively numbered, trust account receipt forms in duplicate
- a trust account deposit book of trust account deposit forms in duplicate
- a trust account cash book
- a trust account journal of consecutively numbered folios
- a trust account ledger.
You must also keep full and accurate accounts of all money you pay or receive for a sale or transaction.
You must keep your books, accounts and records so that they can be audited easily and properly.
Trust account not used during audit period (refer Section 401 of the Act)
You are not required to submit an audit report for a trust account not used during an audit period.
However, you are required to submit a statutory declaration stating that you did not operate a trust account during the audit period.
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Last reviewed 17/01/2014