Time’s up for contractors who failed to lodge financial reporting

19 May 2021

Queensland’s building watchdog is about to move on licensees who have still yet to lodge their financial reporting information.

Self-Certifying Categories 1 and 2 licensees by law, had until 31 March, 2021, to lodge their financial information to the Queensland Building and Construction Commission (QBCC).

The laws are part of the Minimum Financial Requirements (MFR) which help keep the industry financially healthy, by working to reduce insolvencies and helping ensure that tradies and subbies get paid and consumers get their projects completed.

QBCC Commissioner, Brett Bassett, said that it’s time to move on licensees who had failed to lodge their financial information in time.

“We’re now in May, there really isn’t any excuse for failing to lodge the information,” Mr Bassett said.

“Since December last year, the QBCC has issued more than 10 reminders to licensees about lodging, and even undertook a state-wide roadshow to help remind people and give them the opportunity to lodge with assistance from QBCC officers,” he said.

“The QBCC has gone to great lengths to help licensees lodge, and it’s all for the betterment of the industry.

“If licensees are operating with poor financial health, annual reporting helps the QBCC to identify them and to better protect subbies, suppliers, home owners and investors from potential financial detriment.

“These licensees are the companies homeowners are likely to engage and they undertake a range of building work for Queensland families.

“We need them to be financially healthy so that, for example, they can finish the renovations or home builds they start.

“This process is important to help the QBCC protect homeowners who engage QBCC licensees.”

The Commissioner said annual financial reporting was having a positive effect on the industry’s financial health, with more than $1.29 billion worth of working capital injected into major Queensland construction companies since commencement of the laws.

QBCC figures for 2018 showed 279 contractor insolvencies in Queensland, which equated to about three contractor insolvencies per 1,000 licences.

In 2019, 221 insolvencies equated to about two-and-a-half insolvencies per 1,000 licences, and in 2020, the 95 contractor insolvencies in that year comprised roughly one contractor insolvency per 1,000 licences.
“That’s a good start and it needs to continue, and this next round of enforcement will greatly assist,” Mr Bassett said.

Mandatory annual financial reporting was introduced in Queensland via the Minimum Financial Requirements Regulation, on 1 January 2019.

The changes have the support of key industry associations, including Master Builders, Master Plumbers, NFIA and others via the Ministerial Construction Council, who in March this year vowed to encourage their members to comply with the laws.

“The vast majority of licensees, approximately 80 per cent, have done the right thing and have complied with providing the QBCC their annual reporting information,” Mr Bassett said.

“The minority who have not complied now face the prospect of regulatory action, starting from this month.”

Penalties for failing to lodge annual financial reporting, or for providing false or misleading information, include having conditions applied to a licence, or the suspension or cancellation of a licence.

BACKGROUND

QBCC licensees have been informed of their annual financial reporting requirements through methods including letters, State-wide roadshows, advertising, social media and more.

Self-Certifying Category 1 licensees (annual turnover of not more than $200,000): needed to submit annual financial information by 31 March.

Self-Certifying Category 2 licensees (annual turnover of more than $200,000 but not more than $800,000): needed to submit annual financial information by 31 March.

Most categories 1-7 needed to submit their annual financial information by 31 December.

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