Information for Accountants
Net Tangible Assets
Applicants/licensees must have sufficient Net Tangible Assets to meet the minimum requirements. Combined with the defined amount of a Deed of Covenant and Assurance, the Net Tangible Assets must be sufficient to cover the actual revenue being carried out. Applicants/licensees cannot have a negative Net Tangible Asset position. Entities with a negative NTA position cannot rely upon a Deed (a Deed can only be relied upon if the applicant/licensee has NTA of at least $0). QBCC has an online calculator to work out how much NTA you need to cover your turnover, or vice versa. If the Net Tangible Asset amount reported to QBCC decreases by more than 30% (if Cat 1 -3) or 20% (if Cat 4 - 7) from the last advised position, a new financial report must be provided within 30 days.
All related entities providing financial information i.e. related entities owing loans to a licensee, the Trust through which the trustee company trades, or the Covenantor providing financial information to assure a Deed of Covenant and Assurance, are assessed on the same basis - this means financial information provided for related entities, Trusts and Covenantors are not to include intangible, disallowed or uncollectible assets in calculations, and cannot remove any liabilities from calculations under any circumstances.
If a debt owing to a licensee is disputed or is subject to legal proceedings, the amount cannot be included in the calculation of Net Tangible Assets or the Current Ratio,unless recovery is deemed to be virtually certain (as set out in AASB 137 Provisions, Contingent Liabilities and Contingent Assets).
- Intangible assets, which are not included in the calculation of Net Tangible Assets or Current Ratio, include goodwill and borrowing expenses.