3 May 2023
Navigating the changes to NZ’s Construction Contracts (Retention Money) Amendment Act
TSA NZ welcomes the Construction Contracts (Retention Money) Amendment Act coming into effect on October 5, 2023. These amendments will improve the New Zealand construction industry’s transparency and clarity around retention money procedures, providing contractors and subcontractors with confidence that their payments will be safe and protected from insolvency.
Our team is currently undergoing training and upskilling so that we can help our clients understand and navigate their obligations under the new changes. We already have robust Payment Claim processes in place and will work with you to ensure reporting controls are in place that comply with the new requirements, minimising risk to your project.
What are the key changes?
- Retentions must be held on trust in a separate New Zealand bank account, kept distinct from other company-owned money or assets.
- New mandatory three-monthly (minimum) reporting requirements.
- Non-compliance penalties:
– companies: Up to $200,000 per offence
– directors: Up to $200,000 per offence.
- New powers to the Ministry of Business, Innovation and Employment (MBIE) to investigate compliance and prosecute breaches.
- The changes apply to:
– new commercial construction contracts entered into effect from 5 October 2023, and
– existing contracts where they are subject to a significant amendment or renewal after 5 October 2023.