Need help navigating QBCC requirements?
Get it right with help from our specialist QBCC accountants
If you operate a Queensland building and construction industry business, you’ll be familiar with your annual QBCC reporting requirement.
But did you know that almost half of all financial reports submitted to QBCC are either incorrect or require clarification? (Source: QBCC)
We’ve had many new clients come to us due to past problems with satisfying the ratios for QBCC licences – sometimes through no fault of their own.
Our team of specialist QBCC accountants recommend a thorough review of your financial accounts prior to lodging with QBCC. This will ensure you’re either compliant with the requirements or have the opportunity to fix any problems areas.
We can also work with you, or your accounts staff, to increase your knowledge on QBCC requirements and the things to look out for. Should you come across a potential problem in the future, we’ll work with you to find a solution.
The common issues we see with QBCC reporting are the current ratio and net tangible assets tests. You can read more about them in the case studies below.
The current ratio shows the amount of current assets of a business in relation to its current liabilities and it helps determine financial viability. The minimum current ratio for a licensee is 1:1. Which means you must have at least $1 in current assets for every $1 of current liabilities.
The current ratio calculation also depends on your business structure:
- Individuals – personal current assets and current liabilities
- Partnerships – a combination of the partnership’s and the licensed partner’s current assets and current liabilities
- Trusts – a combination of the trust’s and the trustee’s current assets and current liabilities
- Companies – the current assets and current liabilities of the company
Our client, Geoff had been operating in the building industry for over 20 years when a major customer owing him almost $100,000 went into liquidation. This meant that their current ratio test may not have been satisfied.
Thankfully Geoff was proactive and contacted us. We were able to put in a place a strategy to ensure that he did meet the ratio requirement and then monitored it to ensure that he kept meeting it.
Net Tangible Assets (NTA) is 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) that you can earn in the coming year.
Note that the following assets are NOT counted in the calculation:
- personal furniture
- investments or shares in companies that aren’t publicly listed
- investments values using equity accounting methodology
- units in trusts that are not publicly listed
- trade or barter dollars
- assets assured to another licensed entity
- boats, ships, jet skis, planes, helicopters, racehorses and racing cars
- collectors’ items such as paintings, stamps, coins
- contingent assets
- unvested superannuation benefits
- life or income protection insurance policy benefits
By keeping Geoff’s assets healthy and allowable, he has an NTA of $250,000 which would provide for a maximum revenue of more than $5.6 million. This was sufficient to satisfy his anticipated projects for the next 12 months.
You can exceed your Maximum Revenue (MR) by up to 10 per cent without obtaining prior approval from QBCC. If you are going to exceed your MR by more than 10 per cent, you must provide to QBCC either a new financial declaration or Minimum Financial Requirements Report that supports the increase. This must be done prior to exceeding the MR.
To increase or decrease turnover over $800,000, a Minimum Financial Report would need to be prepared by an accountant.
We often see this happen when a builder has another opportunity in addition to their normal work. In our case, Geoff decided to build two spec homes and do a renovation project in addition to his normal revenue.
Geoff engaged our QBCC accountants to complete and lodge a MFR report with QBCC. This ensured he was compliant with the QBCC rules which prevented any financial penalty for exceeding his normal revenue limit.
Note: These are real case studies of clients we’ve worked with, though we have changed their names to protect their privacy.
Need help with QBCC compliance issues?
Get in touch to find out how our QBCC team can help.
Support for the building and construction industry
We can take care of your MFR report to demonstrate compliance with QBCC’s requirements and maintain your licence.
We help licensees by performing quarterly reviews to make sure they are meeting QBCC requirements. If we identify a problem, we’ll work with you to fix it.
Our quarterly meetings are an opportunity for business owners to stay accountable and on task. We review performance metrics, set and manage action plans and keep you focused on the bigger picture.
We make sure our clients have the right business and investment structures to take advantage of tax minimisation and asset protection strategies.
We can free up your time and take the pain out of paperwork with our bookkeeping service. You’ll get accurate insights on your financial performance and peace of mind that everything is up to date.
Our team organises tax planning sessions with clients each year to maximise the flexibility their business structures afford and minimise their tax position but still be compliant with QBCC.
We can prepare simple to complex business budgets and cash flow forecasts that help you plan and manage your business finances. When you feel in control you’ll have the confidence to develop, improve and grow your business.