Webinar Q&A: MFR and Annual Reporting – Cat 4-7 and accountants

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Review the transcript below of the questions and answers from the live webinar about Minimum Financial Reporting (MFR) and Annual Reporting – Cat 4-7 and Accountants, recorded on Friday 29 November 2019

Question

Answer

Didn't the SC2 NTA increase to $46k?

For licensees approved for an SC2 licence after 2 April 2019, they were required to have $46k NTA.  After 31 December 2019, all SC2 licensees would need to hold $46k.  Licensees with a QBCC-approved turnover of less than $30M still need to lodge their information by 31 December 2019, but will have at least a year to strengthen the financial health of their business if they do not meet the financial requirements.

If a trust has a trustee company, does the trustee company reports have to be uploaded?  I was told only the reporting entity which is the trust needs to upload the report, is this correct?

The information required would be based on the trading entity, so if you trade through the trust, it would just be the trust information required.

Our reporting period ends 31 December. So I presume the accounts you want lodged are 31 December 2018?

If your financial year ends 31 December (as opposed to the common financial year ended 30 June), we recognise that you will be unable to provide 31 December 2019 financial year by the annual reporting date of 31 December 2019.  Therefore, your most recent reporting year will still be 31 December 2018.  We will follow up with you in April next year, to obtain your 31 December 2019 financials.

If a licence holder is currently working on wages do they still have to meet the NTA?  If so I am assuming that would have to be the vehicle and tools. 

Revenue for QBCC purposes includes the total income you receive from the building industry and any other source including outside Queensland and overseas, but excludes wages, salary and GST.  Yes, your assets can include vehicles and tools.                                  

If I have a SC1 or SC2 category and my turnover is zero, do I only need to satisfy the NTA for these categories and not required to pass the current ratio test?

The licensee is still required to meet the current ratio and have sufficient net tangible assets for the SC1 and SC2 declaration. Your revenue would just be nil.

Will there be QBCC staff available up to 31 December?

Absolutely, just not on the public holidays.

Is it correct that while trust assets aren't included for MFR purposes but liabilities are?

Any deficiency of the trust is included in the licensee's Net Tangible Asset calculation, however this does not apply to annual reporting (only MFR Reports).

Would you still have to provide a balance sheet and profit and loss if you have no income but just NTAs

Yes, you would still be required to provide a balance sheet and profit and loss statement.  Your revenue would simply be stated as nil.

Should we include a copy of the trustee company financials in our lodgement for a trust to avoid triggering a license suspension based on the trust/trading entities lack of net assets?

No, the trustee company's financials are not required for annual reporting purposes, just the trading entity, being the trust.  MFR Reports are a separate requirement to annual reporting.

Why dont trust assets count?

Trust assets don't count in MFR as their net assets are protected by creditors.

I have been made to lodge the trustee company financials every time even if no assets or income.

That would be for MFR Reports, which is a separate requirement to annual reporting.

Can I basically assume that the structure required to be in is a company not a trust to be governed by QBCC?

QBCC regulates the Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018. QBCC does not licence trusts or partnerships, only individuals and companies (which may incorporate a trust or partnership structure).

Our business is a Company ATF Trust. You were talking about a 20% reduction in NTA. Given the equity in the Trust belongs to the Beneficiaries/Unit Holders, in our situation the Directors of the Corporate Trustee have pledged personal assets for collateral support for the Deed of Covenant. Therefore I assume that if the director's personal NTA goes down, do we need to report this matter.

If a licensee has previously relied upon a Deed of Covenant and Assurance, for annual reporting, this information is not required to be provided.

However, if a covenantors NTA has decreased and is no longer sufficient to provide the assuring amount, then the licensee must, as soon as practicable, give the Commission an MFR Report. This would be done separately to annual reporting.

Can we as accountants login and report our client's figures?

Each client can grant you access as an Accountant, to lodge financial information on their behalf.  A company director can log into myQBCC and add representatives.

Information on how to add representatives can be found at https://www.qbcc.qld.gov.au/myqbcc-how/myqbcc-adding-other-users-your-account

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