Net Tangible Assets
Net Tangible Assets (NTA) means the total assets of a business, less any intangible asset such as goodwill, patents, and trademarks, less all liabilities. Your NTA will determine your maximum revenue (MR) for the forthcoming year.
NTA = [Entity’s Assets] – [Entity’s Liabilities] – [Entity’s Intangible Assets] - [Entity's Disallowed Assets]
You must own your assets both legally and beneficially (e.g. real estate, cash, collectible investments) and they cannot include assets held on trust for another person or corporation.
Assets do not include the following:
- furniture (personal)
- investments or shares in companies that are not publicly listed companies
- investments values using equity accounting methodology where included in special purpose financial statements
- units in trusts that are not publicly listed
- trade or barter dollars and any equivalent scheme
- assets assured to another licensed entity through a Deed of Covenant and Assurance.
- boats, ships, jet skis, planes, helicopters, race horses and racing cars
- collectors items (e.g. paintings, stamps, coins)
- contingent assets
- unvested superannuation benefits, and
- life or income protection insurance policy benefits.
All your liabilities must be taken into account. This includes any debts or obligations you must pay or settle within a certain period of time or pay on demand (e.g. amounts of related entity loans, shares in companies not publicly listed).
What are intangible assets?
Intangible assets include, but are not limited to:
- Right of Indemnity
- Intellectual Property
- Formation Expenses
- Value of Trademark
- Borrowing Expenses, and
- Deferred tax assets.
Related entity loans
Accountants must indicate if related entity loan assets have been included, and must verify their collectability. You cannot include:
- shares in a company which is not a publicly listed. Only shares in publicly listed companies can be counted towards NTA. This also includes units in an unlisted trust
- related entity asset loans which are not independently verified as collectible
- investments valued using the equity accounting methodology.
NTA and financial category
An accountant completing the MFR Report may restrict the licensee's maximum revenue to the category required by stating the NTA as only the amount required for the level of maximum revenue being sought.
Example: Licensee has an NTA of $250,000 which would provide for a maximum revenue of more than $5.6 million. If the licensee only wants an MR of $3,000,000, the accountant can restrict the MR to $3,000,000 by stating 'at least' $156,000 NTA in the MFR Report.
All licensees are subject to conditions:
- Your NTA is not to decrease by more than 30 per cent (or 20 per cent if you are a category 4-7 licensee) from the amount previously stated to the QBCC. This includes a decrease in assets assured by way of a Deed of Covenant and Assurance
- You must send an updated MFR Report (PDF) within 30 days of the NTA decrease
- You must have an NTA in your own right of at least $0.
You must meet the NTA requirement as follows:
For an individual:
For a company :
Subsidiary company within a consolidated group subject to ASIC Class Order (98/1418)
A Company subject to an ASIC Class Order (98/1418) - Deed of Cross Guarantee, may meet the NTA requirement from either:
The applicant or licensee party to the Deed of Cross Guarantee will be required to provide evidence that the Deed is in place when submitting the MFR Report and signed financial statements.
Parent company within a consolidated group
A parent company of a consolidated group subject to ASIC’s audited requirements, may meet the NTA requirement from either:
The applicant or Licensee party to the Deed of Cross Guarantee will be required to provide evidence that the Deed is in place when submitting the MFR Report and signed financial statements.