Annual reporting for Queensland Building & Construction Commission (QBCC) licensees
Contractor-grade licencee under the QBCC Act must provide financial information to QBCC ensuring the licensee meets the minimum financial requirement (MFR). The due date for annual reporting is 31 March for SC1 and SC2 and 31 December for the rest categories except for Nominee Supervisor who is not required to report. The category is determined by turnover. If you are on a category 1 and above, the financial information you need to submit are:
- Profit & Loss Statement
- Balance Sheet
- Aged debtors and creditors
- Statement of cashflows
MFR includes current ratio at least 1 and Net Tangible Asset to support turnover for last 12 months. QBCC calculates the current ratio and Net Tangible Asset based on the financial information provided to ensure licensee is financially sustainable.
Current ratio = Current Assets/Current Liabilities. According to MFR Regulations, there are many rules to calculate the ratio, a few listed below are the most common ones:
- Disallowed and intangible assets are excluded from current asset, such as formation expenses
- Debtors over 180 day only allows 50%, and none if over 365 days
- Work in Progress has to be verified
- Related Party loans needs to be confirmed as recoverable
Net Tangible Assets (NTA) = Total assets – Total liabilities – Disallowed & intangible assets
NTA calculates maximum revenue (MR) for the year you can do.
Again, MFR regulations set out rules which I cover a few common ones below:
- All liabilities are included, new addition is AASB16 Leases
- Deed of Covenant can be used in limited circumstance provided NTA is positive
- Disallowed and intangible assets are excluded. Disallowed assets include:
- Racehorses, paintings, stamps or coins
- Furniture for personal use
- Franchise fees
- Superannuation if you cannot access it immediately
- Unlisted shares
- Patent and Intellectual Property
The process of annual reporting is not then described “easy as”. You may come across QBCC saying you should have financial information in your accounting software, and you don’t need to engage accountant to submit, however red tape is everywhere in the MFR regulations.
My recommendation for QBCC licensee is get your year end information in as early possible after the financial year for us to perform the initial assessment. If you fail to meeting the minimum financial requirement, we can come up with a strategy in the next couple months for you to comply. It is very important you seek professional advice on this.
Table below is financial categories - financial information requirement extracted from QBCC website.
Please do not hesitate to contact one of your trusted advisors at Cordner Advisory should you need further assistance.
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