The trust accounting requirements under the Water Act and the code came into effect from 1 July 2025, except for client ledger requirements that started on 1 October 2025.
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About the trust accounting requirements
Intermediaries must follow the trust accounting requirements when they receive money on behalf of another person for water intermediary services, subject to certain exceptions.
These requirements are found in:
- Division 5, Part 5 of the
- .
These requirements provide safeguards to protect client money. They include when and how intermediaries must:
- setup and maintain a trust account
- handle money in a trust account
- maintain client ledgers
- prepare trust account statements and obtain auditor reports
- notify the ÌÇÐÄÔ´´ of maintaining a trust account
- appoint an auditor and have trust accounts audited
- keep trust account records.
When the trust accounting requirements start
From 1 July 2025, intermediaries must have a trust account if they receive money on behalf of a person while providing a water markets intermediary service unless an exception applies.
Example
On 15 July, a client enters into an agreement for a broker to sell eligible tradeable water rights on their behalf.
The broker receives money from the sale of the water rights on 21 July. This is the first day the obligation arises for the broker to maintain a trust account.
Setting up trust accounts
Trust accounts must be set up with an Australian authorised deposit-taking institution, such as a bank. The naming requirements for trust accounts are set out in the code.
If the trust account is interest bearing, intermediaries must manage any interest earned in a trust account.
Intermediaries can choose to have one trust account for multiple clients, or separate trust accounts for one or more clients.
Naming trust accounts under the code
Intermediaries must follow mandatory requirements when naming the trust account. The name must include:
- either the words ‘water market trust account’ or ‘water markets trust account’, and
- either the legal name or the registered business name of the intermediary. This is if the bank allows the use of the registered business name and it is used when offering intermediary services.
An is available on the Department of Climate Change, Energy, the Environment and Water website, to help intermediaries open a trust account, but there is no requirement to use this letter.
Notifying the ÌÇÐÄÔ´´ of a trust account
Intermediaries must notify the ÌÇÐÄÔ´´ if they are maintaining a trust account. This notice must be given within 3 months of the first day their trust accounting requirements start.
Example
A broker had their obligation to maintain a trust account start on 21 July 2025. The broker has 3 months starting on this date to notify the ÌÇÐÄÔ´´ of maintaining the trust account. In this example, the notification must occur before 21 October 2025.
How to notify the ÌÇÐÄÔ´´ of a trust account
To notify the ÌÇÐÄÔ´´ that a trust account is being maintained, some of the information that intermediaries could choose to provide includes:
- the legal name of the intermediary that is maintaining the trust account
- the registered business name of the intermediary, and ABN/ACN (as applicable)
- the name of the account holder of the trust account
- the name, BSB and account number of the trust account
- the name of the bank or other authorised deposit-taking institution that the trust account is being held with
- contact details including email address and phone number for the intermediary.
Email this information to watercode@accc.gov.au
Appointing a trust account auditor
Intermediaries must appoint an eligible auditor within 3 months of the first day they are required to maintain a trust account.
Example
A broker had their obligation to maintain a trust account start on 21 July 2025. The broker has 3 months starting on this date to appoint an auditor. In this example, the appointing must happen before 21 October 2025.
Intermediaries must obtain a trust account auditor’s report each financial year.
Auditor eligibility requirements
Only people who meet the eligibility requirements can prepare a trust account audit report.
This auditor must be one of the following
- a member of CPA Australia, and hold a current Public Practice Certificate issued by that body
- a member of Chartered Accountants Australia and New Zealand, and hold a current Certificate of Public Practice issued by that body
- a member of the Institute of Public Accountants, and hold a current Professional Practice Certificate issued by that body
- a registered company auditor, within the meaning of the Corporations Act 2001
- an authorised audit company, within the meaning of the Corporations Act 2001.
This auditor must not be any of the following:
- a related party of the intermediary
- an employee, director or partner of an entity that has, or has had a contractual relationship with the intermediary in the previous 3 years. This does not apply if the contractual relationship is to provide auditing services.
An auditor's role under the code
An auditor is expected to conduct an audit in accordance with Australian Auditing Standards.
A trust account audit report must contain the information and matters specified in r 5.24 of the code. This includes a signed statement by the auditor setting out certain matters, which broadly include:
- whether they received all necessary financial records, information and explanations from the intermediary
- the auditor’s opinion on whether the intermediary’s trust accounts, financial records, and trust account
- statements comply with the requirements under the code and the Act
- whether the audit was conducted in accordance with the Australian Auditing Standards
- how the auditor meets the eligibility requirements.
See more detail in our information sheet about water market auditing services.
Handling trust account money
There are requirements an intermediary must follow when handling trust account money. Any money they:
- credit into the trust account must only be money received on behalf of another person when providing intermediary services covered by the code
- withdraw from the trust account must only be withdrawn for paying the person that is lawfully entitled to receive it.
Trust money must not be comingled with non-trust money in a trust account under any circumstance.
Any money that is held in a trust account cannot be:
- used to pay for the intermediaries’ debts of a creditor
- claimed by creditors seeking payment for these debts through legal processes.
Interest in trust accounts
The Water Act does not specify if trust accounts can be interest or non-interest bearing. If interest is earned in an account, it must be paid to the client that is lawfully entitled to receive it unless the client agrees to another arrangement.
Example
An intermediary opens an interest-bearing trust account that they use for several clients. The intermediary must calculate how much interest each client earned for their portion of the account and pay that amount to each client.
Deducting fees or expenses
An intermediary can deduct fees or commissions from client money held in trust if they are lawfully entitled to.
In practice, this means an intermediary can deduct a fee or commission from a trust account if:
- there is a contracted agreement to do this, and
- the withdrawal is in line with that agreement.
This is designed to protect client funds and ensure that intermediaries deal with these funds appropriately.
Example
A client signs an agreement with a broker for trading the client’s water rights. The agreement includes that the broker earns a commission on the successful trade of the client’s water rights. The agreement also includes the commission is to be deducted from the money received from trading the client’s water rights. The broker:
- sells the water rights in accordance with the client’s instructions
- deducts the agreed commission from trust money held on the client’s behalf
- transfers the net sale proceeds from the trust account to the client.
Maintaining client ledgers for trust accounts
Intermediaries must keep a ledger for money held in the trust account on behalf of each client during the financial year.
Client ledgers must:
- comply with the code
- include the information and records required in the code
- be maintained during the financial year.
Providing client statements when requested
Clients can ask their intermediary for a statement of their client ledger from the trust account.
The intermediary must give the statement to the client within 5 business days of receiving the client’s request. Only the ledger for the requesting client should be released.
Preparing annual trust account statements and auditor reports
Within 3 months of the end of each financial year, intermediaries must:
- prepare a trust account statement
- obtain a trust account auditor’s report from the appointed auditor.
If the bank maintains the trust account at different branches, intermediaries can prepare separate statements for each branch.
These statements and reports must contain the information and records set out in the code. The ÌÇÐÄÔ´´ has developed the following example documents to assist intermediaries in understanding these requirements. Intermediaries do not have to use any of them.
Intermediary's financial year
Under the Water Act, an intermediary’s financial year ends on 30 June. This means both the trust account statement and auditor’s report must be completed before 30 September. This does not include body corporates whose end of financial year can be different.
Record keeping
Intermediaries must keep trust account records for 6 years beginning on the date the record was given to, or prepared by, the intermediary.
Exceptions to trust accounting obligations
There are some intermediaries that have exceptions to these trust accounting obligations. These are for intermediaries that are already required to:
- maintain trust accounts prescribed by a state or territory law, and
- deposit into this trust account money received on behalf of another person when providing intermediary services, and
- that intermediary is either:
- enrolled as a legal practitioner of a federal court or the supreme court of a state or territory, or
- licensed or registered under a state or territory law as a real estate agent or conveyancer
The list of prescribed state or territory laws are found in the code.
These exceptions help these intermediaries avoid overlapping rules and reduce unnecessary compliance tasks when managing trust money.