Trust accounts and audit requirements - real estate

Payment of trust money into a trust account

Licensees under the Property and Stock Agents Act 2002 (the Act) must hold clients’ funds in a trust account.

Those funds cannot be used for any purpose other than for that client and must be disbursed as the client directs.

These trust accounts should not be confused with a trust account established by the owners corporation of a strata scheme as required under the Strata Schemes Management Act 2015.

Licensees in charge to authorise trust account withdrawals

Only a licensee in charge (LIC) of a business may authorise trust account withdrawals from a trust account.

This means that LICs are responsible for reviewing and approving all transactions for the trust account before they occur, including electronic fund transfers and payment of trust money by cheque.

There can also only be one LIC who is able to authorise withdrawals for a trust account.

An LIC will be unable to delegate their authority to another person.

LICs should be aware that if they allow another person to withdraw funds from the trust account on their behalf, they may still be held liable for any breach or defalcation.

Approved deposit-taking institutions

Trust accounts must be kept at an authorised deposit-taking institution in NSW.

The Secretary has approved the following deposit-taking institutions:

  • Australia and New Zealand Banking Group Limited (ANZ)
  • bcu a Division of Police & Nurses Limited
  • Bank of Queensland
  • Bank of Sydney Ltd
  • BankWest
  • Bendigo Bank Limited
  • Berrima District Credit Union Ltd
  • Coastline Credit Union Ltd
  • Commonwealth Bank
  • Delphi Bank
  • Greater Bank Ltd
  • HSBC Bank Australia Limited
  • Hume Bank Limited
  • Illawarra Mutual Building Society Limited
  • Macquarie Bank Limited
  • Maitland Mutual Building Society Ltd
  • National Australia Bank Limited
  • Newcastle Permanent Building Society Ltd
  • Regional Australia Bank Ltd
  • St. George Bank Limited
  • Southern Cross Credit Union Ltd
  • The Summerland Credit Union Ltd
  • Suncorp-Metway Ltd
  • Unity Bank Limited
  • WAW Credit Union Co-operative Ltd
  • Westpac Banking Corporation.

Requirements when opening a trust account

When opening a trust account, these requirements apply:

  • licensees need to notify the authorised deposit-taking institution in writing that the account is a ‘trust account’ required by the Act
  • if the trust account is held by a corporation, the account must be in the name of the corporation
  • if not, the trust account must be in the name of the licensee or the firm
  • the name of the licensee, firm or corporation needs to appear as a prefix of the account name, followed by any other necessary identifier of the trust account
  • the words 'Trust Account' must also be included in the name of the trust account and all cheques drawn on the trust account.

Unique identifying numbers for general trust accounts

Under the Property and Stock Agents Regulation 2014, a licensee who opens a trust account must provide the authorised deposit-taking institution (bank) with a unique identifying number given by NSW Fair Trading.

Each trust account must have a unique identifying number. If a business maintains multiple trust accounts, each account will need to be registered separately. If the trust account is held by a corporation, the trust account must be registered using the corporation's licence number.

Licensees can use NSW OneGov to apply for a unique identifying number and obtain the necessary form(s) to notify their authorised deposit-taking institution.

The authorised deposit-taking institution lodges its monthly returns using this unique identifying number.

Licensees maintaining a trust account that was opened prior to 31 December 2014 must also obtain a unique identifying number and have it registered by their authorised deposit taking institution.

How can I register online?

Access the trust account registration to get a unique identifying number for all trust accounts you intend to open or maintain.

Once you enter your licence number and email address, you will be sent a confirmation email with a notification form in duplicate attached.

Print the forms and lodge them with your financial institution and keep the duplicate once stamped by the financial institution.

Authorised deposit-taking institutions’ requirements

The Act sets out requirements for approved authorised deposit-taking institutions with regard to:

  • calculating interest on agents' trust accounts
  • paying a prescribed proportion of interest earned on agents' trust accounts to the Property Services Statutory Interest Account
  • monthly reporting to the Secretary, and
  • providing the Secretary their annual auditor’s certificate.

Exempt trust accounts

An authorised deposit-taking institution is not required to pay interest to the Statutory Interest Account or provide monthly reports to NSW Fair Trading for trust accounts that are a separate account:

  • kept on the instructions of the client for the exclusive benefit of the client, or
  • for the exclusive benefit of both a vendor and purchaser of land.

Requirements when closing a trust account

A licensee must, within 14 days after closing a trust account, either:

  • notify Fair Trading online through Service NSW, or
  • complete the Green Form and submit it to NSW Fair Trading.

A copy of the Green Form can be obtained by clicking on the link shown below.

Note: If a financial institution has not fully uploaded their file records online on the Government Licensing System, via the Notification of Closing a Trust Account, the system will not recognise the account number entered by an agent.

The licensee must keep the trust account closure confirmation notice for three years.

The Green Form needs to be signed by the licensee (in duplicate):

  • Original – sent by the agent to NSW Fair Trading, PO Box 972, Parramatta 2124 within 14 days after closing the trust account.
  • Copy – kept by the agent.

Unclaimed trust money

From 1 July 2013, the responsibility for handling unclaimed trust money was transferred from NSW Fair Trading to Revenue NSW.

The Unclaimed Money Act 1995 now applies to unclaimed money held in a trust account under the Act.

Trust money is considered unclaimed if it has been held by a licensee for more than two years in a trust account. This applies to all amounts of money.

A licensee must make reasonable efforts to locate the owner of any outstanding money in the trust account.

Failure to do so could attract a penalty of up to $5,500.

Money held in a trust account by a former licensee or the personal representative of a deceased licensee is unclaimed money and must be returned to the Revenue NSW within three months after the person ceased to be a licensee or became a personal representative.

Failure to comply can attract a penalty of up to $5,500 and up to $550 for each additional day of non-compliance.

What to do with unclaimed trust money

All returns and payments should be made to the Chief Commissioner Revenue NSW, and not to Fair Trading.

Visit the unclaimed money page of the Revenue NSW website for more information.

Trust account audit requirements

Licensees' records in relation to the handling of trust money must be audited.

Who is required to have their trust accounts audited?

The following people must have their trust accounts audited if they received or held trust money during the financial year ending 30 June:

  • a licensee (corporation or individual)
  • a former licensee (corporation or individual), or
  • a personal representative of a licensee.

Generally, for licensed corporations, it is the corporation that receives and is responsible for trust funds and not an individual licensee. In these cases, the corporation must ensure the trust account audit takes place.

However, if an individual licensee receives and is responsible for trust money, then they must ensure the trust account audit is done.

Who is required to submit an audit?

All trust account audits must be completed and submitted online by the auditor through the Auditor’s Report Online portal.

When must the audit be submitted?

All audits must be submitted to the Secretary within 3 months after the end of the audit period and no later than 30 September of that year.

Please note that all previously approved alternate audit periods are now rescinded.

If a trust account audit is not submitted by the due date, licensees could be disqualified from holding or renewing a licence.

Who can conduct the audit?

Auditors must be qualified under section 115 of the Property and Stock Agents Act 2002.

Registered audit companies, authorised company auditors and members of a Professional Accounting Body holding a Public Practising Certificate or Certificate of Public Practice can conduct the audit.

Professional Accounting Body is defined under the Australian Securities and Investments Commission Act 2001, for example, CPA Australia, Chartered Accountants Australia and New Zealand and the Institute of Public Accountants.

Who can't conduct the audit?

Within the last 2 years of the audit period, an auditor must not have been employed by, nor be a partner of, the person whose records or documents are to be audited.

An auditor must not be a licensee, or a shareholder in a corporation that is a licensee with less than 20 shareholders.

Check that an auditor is registered by searching for their details on the ASIC website.

Audit for 2019/20 financial year

To prepare an audit report for trust money held during the 2019/20 financial year, visit the Trust account auditors page.

Audits must be submitted using Auditor’s Report Online.

If you have any questions about the audit requirements, contact Fair Trading on 13 32 20.

If no trust money held in 2019/20

If a licensed corporation or an individual licensee holds a trust account during the audit period 2019/2020 and there have been no  transactions, you must send an email with a copy of the bank statement for the full audit period to audits@customerservice.nsw.gov.au.

Audits for other financial years

If a licensee has an outstanding audit commitment for any of the previous financial years, send your enquiry to: audits@customerservice.nsw.gov.au

Frequently asked questions

Who has to lodge a trust account auditor’s report? 

Under the Property and Stock Agents Act 2002 and Conveyancers Licensing Act 2003, all licensees are required to lodge a trust account auditor’s report if they received or held trust money during the audit period.

What if I am in partnership with other licensees? 

Only one licensee in a partnership has to lodge an audit for the partnership.

When does it have to be lodged? 

Lodgement must be within 3 months of the end of the audit period which is 30 June each year.

The due date for lodgement is 30 September each year. You still need to lodge even if you ceased trading during the period or only traded for part of the period.

Who's responsible for lodging the auditor’s report correctly and by the duedate? 

The Act makes it clear it's the licensee’s responsibility to ensure the report is lodged by the due date.

Before engaging an auditor, inform them that the report must be lodged by 30 September and confirm that the auditor will be able to complete the report in time for you to lodge it by the due date.

Give the auditor access to all records and documents relating to money held in a trust account for the audit period, as soon as possible after the end of the audit period.

Monitor the progress of your report with the auditor on a regular basis.

Don't leave the report with the auditor and forget about it.

If your auditor cannot complete the report within the agreed timeframe due to some unforeseen circumstance preventing on time lodgement, you should immediately engage another auditor.

How do I lodge an auditor’s report? 

From 1 July 2019, your auditor will be completing and submitting your auditor’s report through the ‘Auditor’s Report Online’ portal.

To confirm engagement of your auditor, you'll need to authorise the auditor through an email from the auditor requesting permission to lodge an Auditor’s Report on your behalf.

When the report is completed and submitted by your auditor, you'll receive a copy via email.

Can the lodgement deadline be extended? 

All auditor’s reports are required to be lodged by the due date.

The deadline will only be extended in exceptional circumstances that have existed over a period of time and can be supported by evidence.

Reasons such as unaware of the requirement to lodge, forgetting to provide access to the auditor, allowing insufficient time for the auditor to complete the report, forgetting to lodge the report, the auditor was too busy to get it done in time or the auditor forgot to lodge the report, aren't acceptable.

What happens if the auditor’s report isn't lodged by the due date? 

If an auditor’s report isn't lodged by the due date or not lodged at all, and you don't have an acceptable reason.

Fair Trading will contact you and take action based on your circumstances.

Failure to lodge by the due date makes an individual or corporation a disqualified person under the Act and liable to disciplinary action.

Alternatively, Fair Trading could issue a $550 fine for a late lodged audit by an individual or $1,100 for a corporation.

A $1,100 fine applies for a late lodged statutory declaration by an individual or corporation.

Failure to lodge an auditor’s report means you may not be able to renew your licence until you lodge.

© State of New South Wales through the Office of Fair Trading, June 2020

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