Managing your QBCC compliance in uncertain times
April 16, 2020
QBCC (Queensland Building and Construction Commission) licence holders are required to continuously monitor their financial position and must report their key financial information to the QBCC each year. It is very important for licence holders to keep a watchful eye on their financial data so that any issues can be addressed immediately. In these particularly uncertain times, licence holders may start to see their financial position deteriorate as work in the pipeline either gets put on indefinite hold, or is cancelled entirely due to the COVID-19 outbreak.
It’s now more important than ever to understand your QBCC financial requirements, as well as knowing when to seek advice and open a line of communication with the QBCC.
What are the QBCC minimum financial requirements?
The following requirements apply to all licences regardless of their turnover category:
- You cannot exceed your maximum revenue amount by more than 10% without informing the QBCC. Your maximum revenue (MR) is determined by your net tangible assets figure. This is stated on your most recent financial declaration or MFR report submitted to the QBCC. The maximum revenue is for the entire financial year (with an allowance to exceed the MR by 10%).
If you anticipate that you will exceed the MR by more than 10%, you need to inform the QBCC. Net Tangible Assets (NTA) means the total assets of a business, less any intangible assets such as goodwill, patents, and trademarks, less all liabilities. Your NTA will determine your maximum revenue for the forthcoming year. - You need to maintain a ratio of current assets to current liabilities (Current Ratio) of at least 1:1.
- You must ensure you continue paying all your subcontractors and suppliers.
Each category of licence has different NTA requirements, meaning a licence holder must ensure that the value of their tangible assets exceeds their liabilities by the threshold amounts.
If you do not meet the minimum NTA requirement, it is important to seek advice on the steps required to strengthen the financial position of your business and potentially open the lines of communication with the QBCC.
Financial reporting requirements for SC1 and SC2 Licensees (Maximum revenue up to $800,000)
SC1 and SC2 licences are “Self-Certifying” licences with turnover of up to $200,000 for SC1 and $800,000 for SC2.
|
Licence category |
Turnover up to |
Net Tangible Assets required by 31 December 2020 |
|
SC1 |
$200,000 |
$12,000 |
|
SC2 |
$800,000 |
$46,000 |
Financial reporting requirements for Categories 1 – 3 (Maximum revenue between $800,001 – $30,000,000)
|
Licence category |
Turnover range |
Net Tangible Assets required by 31 December 2020 |
|
Category 1 |
$800,001 – $3,000,000 |
$46,001 – $156,000 |
|
Category 2 |
$3,000,000 – $12,000,000 |
$156,001 – $480,000 |
|
Category 3 |
$12,000,001 – $30,000,000 |
$480,001 – $1,200,000 |
What if your turnover is increasing or decreasing?
If your business is experiencing a boom, even in the short-term, you must consider the effect this could have on your QBCC licence and re-evaluate your estimated annual revenue. Moving into a different turnover bracket (as summarised above) may mean you need to report additional information to the QBCC, which may include submission of a Minimum Financial Requirements report and financial reports prepared by your accountant that are no more than 4 months old.
If you anticipate that upcoming work is slowing down and you have concerns about your ability to continue trading in the current environment, it is vitally important to seek advice from your accountant on how to manage this process and your compliance with the QBCC. The QBCC have strict requirements on licencees in terms of ensuring solvency of the business and breaching these rules may result in the cancellation of your licence. We are hopeful that the QBCC will take a common sense approach to such issues in these challenging times, however this has yet to be seen. Engage with your accountant now to reduce risk, manage costs and control the process.
When you’re busy and business is booming, it’s easy to put things on the back burner, however staying on the front-foot with regard to these requirements will ensure you have the best chance to manage the process with the QBCC, reduce risk, and retain your valuable licence.
We are here to help
We are here to help. Please contact us on 07 3217 2477 or email us should you have any queries or require our services.