Minimum Financial Requirements implementation update
Changes to the Minimum Financial Requirements have been implemented in two stages. Phase 1, which began on 1 January 2019, re-introduced mandatory annual reporting for all licensees, changed reporting decreases in Net Tangible Assets and clarified how assets are to be treated. Phase 2 began on 2 April 2019 and introduced higher reporting standards for category 4-7 licensees, along with the remainder of the reforms.
These laws support the security of payment initiatives within the building and construction industry.
Under the new MFR Regulation, Queensland Building and Construction Commission (QBCC) licensees who hold a contractor grade licence will be required to meet annual financial reporting obligations. If you hold a Nominee Supervisor or Site Supervisor licence only, these MFR laws do not apply to you.
What does this mean?
- While the MFR Regulation has commenced in two stages (1 January 2019 and 2 April 2019 as outlined above), parts of the repealed MFR policy will continue to apply to SC1 and SC2 licensees and Category 1-3 licensees until their first annual reporting day, being 31 December 2019;
- Licensees may be required to provide additional information to substantiate deeds and related party loans;
- Increased penalties and enforcement action for licensees that do not comply with the new requirements;
- Licensees will be required to provide annual financial information. Visit QBCC’s annual reporting page for more information.
Changes to self-certification category 2 (SC2)
- The SC2 licensee revenue limit has now increased to $800,000;
- If you have a turnover of between $600,000 and $800,000 and are relying on a deed of covenant and assurance to meet your net tangible assets (NTA) you can continue to rely on your deed until 31 December 2019;
- The minimum NTA required for the SC2 category has increased from $36,000 to $46,000 from 2 April 2019. Submission of you self-declaration was due by 31 December 2019. However, if you did not meet the deadline you must still provide your annual financial information as soon as possible. This can be done online via the myQBCC portal.
The MFR Regulation contains stronger reporting requirements requiring licensees to report significant decreases in Net Tangible Assets (NTA).
- For licence categories SC1, SC2 and Categories 1-3, the current reporting requirements will continue. That is, you are required to report (via a declaration for SC1 and 2 and a report for categories 1-3) where your NTA position decreases by more than 30% below your most recent QBCC accepted NTA position.
- For licence categories 4-7, there are now higher reporting standards. The reporting requirements (to provide an MFR Report) apply where your NTA position decreases by more than 20% below your most recent QBCC accepted NTA position.
The following table provides a summary of your annual reporting requirements.
To make it easier to submit information, you can upload your reports though the online portal myQBCC.
View our recent webinar on the changes to the minimum financial requirements.