Recent changes have been announced by the Queensland Building and Construction Commission (QBCC). These changes are mainly to do with the Minimum Financial Requirements (MFRs) and will affect those working within the building and construction industry.
This means that it’s now more important than ever to make sure you are compliant.
What do you need to know when it comes to dotting your compliance i’s and crossing those MFRs t’s? In this blog, we will go through your compliance must-knows as well as potential outcomes for not being compliant.
Let’s start with why the QBCC created the MFRs policy.
The MFRs policy has been used by the QBCC to help promote financially viable businesses and to foster professional business practices in Queensland. However, whether or not this system is fair has been widely debated amongst the building community.
But, for the purpose of this discussion we will focus mainly on the facts. To be able to obtain a Queensland building licence, you must meet the minimum financial requirements of your financial category.
Note: there are nine categories that a licensee can fall into for their MFRs, and, with the recent changes to reporting coming into effect, it’s important to know which category you are in to ensure that you are meeting your compliance obligations. To find out what category you are in, you can check your licence or log in to your account on the My-QBCC website.
The below image is a breakdown of the MR and NTAs for each category from the official QBCC site.
As you can see, the category that you are placed in depends on two numbers: Your Maximum Revenue and your Net Tangible Assets, which means a change in either of these areas has a direct effect on the other.
All categories are also required to achieve a continual current ratio of 1:1. This means that current assets must equal to or exceed current liabilities. If this test is failed, you will likely lose your licence.
Essentially, if you are worried about:
Then it might be worth a conversation with your accountant to devise a plan to ensure you’re meeting your requirements.
What Happens if I’m not meeting the Requirements of my Category?
If you fail to meet the MFRs, your licence may be suspended or canceled – meaning that you will no longer be able to trade your business in Queensland. Unfortunately, this is a very real and serious consequence that can have a big impact on your business and personal life.
The best way to ensure that you are meeting your requirements is to have regular (quarterly is recommended) reviews with your accountants to make sure you’re on the right track.
At Walker Hill Chartered Accountants, we recommend regular reviews, especially at the end of March or Q3 to ensure you’re going to be meeting your QBCC requirements.
To organise your Q3 review with us, call our office on 07 3367 3155 today!