In Queensland, individuals and companies must hold a QBCC licence to carry out building work where it involves:
• Plumbing and Drainage
• Gas Fitting
• Termite Management – Chemical
• Fire Protection
• Completed Residential Building Inspection
• Building Design – Low Rise, Medium Rise and Open
• Site Classification
• Mechanical Services
In 2019 the Queensland Government introduced the Minimum Financial Requirements (MFR) Regulation. This regulation re-introduced mandatory annual reporting for all Queensland Building and Construction Commission (QBCC) licensees who hold a contractor grade licence. The only exemptions are for people who hold a Nominee Supervisor or Site Supervisor licence. The purpose was to reduce bankruptcy within the industry and to ensure that people are paid for their work.
The QBCC issues a licence once you have shown that you have the required working capital. The new law means that you must now also report your financial information each year.
Differences between Annual Reporting and MFR Reporting
• an MFR report must be prepared by a qualified accountant who is independent of the licensee
• annual reporting does not require an accountant and can be done easily online
• MFR reports are more complex and detailed than annual reporting
• an MFR report is only required when you first apply or make financial changes to your licence
• annual financial reporting must be submitted by the required reporting day each year
Darcy Bookkeeping provides advice on the financial requirements for licensing and can prepare required MFR reports as required by the legislation. We have an in depth understanding of not only the BAS, GST and other taxation obligations of builders and tradies, but also the complex area of MFR reports.
When to report your MFR
Licensees are required to report their financial information at certain times including:
• obtaining a new licence
• increasing or decreasing a licensee’s maximum revenue
• where the net tangible asset position has decreased by more than:
o 30% for licensees within categories SC1, SC2 and categories 1-3
o 20% for licensees within categories 4-7.
• on expiry of the licensee’s professional indemnity insurance policy
• on request by the licensee
• significant change to the structure of the business
• restructure of partnership
• change or withdrawal of covenantors
• when requested by the QBCC
How MFR is Calculated
The QBCC calculates the financial viability of a business using the minimum Net Tangible Assets (NTA) and the Current Ratio of your assets versus liabilities. In order to calculate this, licensees must submit annual financial reporting information to the QBCC. The minimum Current Ratio calculation depends on whether your business structure is set up as an individual, partnership, trust, company, or part of a consolidated group of companies.
The ratio calculation also depends on what category your license falls under:
• Self-Certification Category 1 (SC1) – annual turnover up to $200,000
• Self-Certification Category 2 (SC2) – annual turnover up to $800,000
• Category 1-3 licensees – annual turnover between $800,000 and $30,000,000
• Category 4-7 licensees – annual turnover over $30,000,000
Higher reporting standards are required for category 4-7 licensees.
Darcy Bookkeeping are specialists. We know the ratios, what deductions you can make, and what things are excluded (borrowing expenses, uncollectible debts or receivables, formation expenses, etc.).
If you don’t comply with the State Government regulations which are administered through the QBCC, you risk receiving demerit points, having your licence suspended, or, at worst, even having your licence cancelled.
If you are a builder or a tradie, Darcy Bookkeeping can prepare your detailed MFR report and annual report, ensuring you both meet and maintain compliance with the QBCC regulations.