Construction Contract Legislation Changes and Guidance:
20 September 2023
Accounts & Records, and Reporting on retention money
What is Changing?
On 5 October 2023, changes are coming into effect under the Construction Contracts (Retention Money) Amendment Act 2023. The changes to the Construction Contracts Act 2002 are new rules on Accounts & Records and Reporting on retention money.
These amendments strengthen The Act and helps ensure that subcontractors can be paid what they are owed if their head contractor becomes insolvent. It also gives the Ministry of Business, Innovation and Employment (MBIE) the ability to investigate and prosecute newly created retention money offences.
Who Does This Apply To?
It is important to note that the change in retention money rules in the Construction Contracts Act applies to all commercial construction contracts in both commercial and residential construction. A commercial construction contract is any construction contract where no party is a residential occupier of the premises that are the subject of the contract. Therefore, a subcontract in the residential sector, for example, with a plumbing subcontractor, is a commercial construction contract and the retention money rules will apply.
Read The Guidance
Registered Master Builders and the Commercial Working Group have worked with Hazelton Law to develop guidance about what these changes mean and how to be compliant with Accounts & Records, and Reporting on retention money when holding in a bank account.
You can read the guidance here.
The guidance is broken down into four parts and covers the following information in more detail:
- Some basics: outlining the general information you need to know.
- The bank account: under the new rules, the retention money must be in its own bank account.
- Accounts and records: the new rules set down the details of what is required for Accounts & Records to be compliant.
- Reporting on retention money: the obligation to Report on retention money is new and is a proactive and ongoing obligation. The contractor must report on retention money whether a subcontractor requests a report or not.