The Queensland Building and Construction Commission (QBCC) requires that the following criteria are always met for licensees. In particular, the following must be reported to the QBCC based on your 30 June 2025 financial statements:
- Net Tangible Assets (NTA):
Your business must have sufficient NTA to cover its operations. NTA is calculated as total assets less intangible and other assets (see below); and net of all liabilities. It's important to note that liabilities from related entities cannot be excluded from this calculation.
- Current Ratio:
The minimum current ratio is 1:1, meaning your current assets should be at least equal to your current liabilities. If your annual revenue exceeds $800,000, an independent accountant must calculate this ratio as part of your Minimum Financial Requirements (MFR) report. The ratio cannot be rounded up to meet the requirement; for example, a ratio of 0.9987:1 does not meet the standard.
Financial Categories and Reporting requirements
All licensees have to submit annual financial information. The type of information submitted depends on the licence category. In addition, licensees may be required to lodge a Minimum Financial Requirements (MFR) Report in certain circumstances e.g. increasing your maximum revenue or reporting a significant decrease in NTA.
- Category SC1:
For businesses with maximum revenue up to $200,000, you can self-certify that you meet the annual financial requirements. This includes having at least $12,000 in NTA and a current ratio of at least 1:1. No MFR report is required in most circumstances for this category.
- Category SC2:
For businesses with maximum revenue up to $800,000, you can also self-certify, provided you have at least $46,000 in NTA and a current ratio of at least 1:1. Again, no MFR report is required in most circumstances for this category.
- Categories 1–3:
For businesses with maximum revenue up to $30 million, the annual financial information is lodged on-line and can be based on your internal financial statements. An MFR report is required in the relevant circumstances to demonstrate compliance with the financial requirements.
- Categories 4–7:
For businesses with maximum revenue exceeding $30 million, the annual financial information is lodged on-line and must be based on your financial statements which comply with all relevant accounting standards. An MFR report is also required in the relevant circumstances.
Work in progress
Under the relevant Australian Accounting Standards (particularly AASB 15 Revenue from Contracts with Customers), Work in Progress (WIP) must be recognised based on the stage of completion of a fixed price construction contract. It is important that these Standards are applied consistently and are a true representation of the project's progress and associated revenue. It’s important to ensure that any amounts recognised as WIP only include profit that has not been earned in accordance with AASB 15 or costs that are not recoverable. Also any losses on contracts must be fully recognised as soon as the loss is determined.
Net Tangible Assets (NTA)
When calculating Net Tangible Assets (NTA) for QBCC reporting purposes, it is essential to exclude certain disallowed assets as they do not meet the criteria for tangible, reliable financial backing. Disallowed assets include:
- intangible assets such as goodwill, trademarks, and patents;
- unsecured loans to related parties or directors (unless appropriately documented and legally recoverable);
- a percentage of overdue debtors;
- prepaid expenses;
- deferred tax assets;
- unlisted investments without verifiable market value; and
- assets held in trust for others.
Where a licensee includes a loan to a related entity as an asset in their Net Tangible Asset (NTA) calculation, it is important to understand that the related entity must also meet the QBCC’s Minimum Financial Requirements. Specifically, the related entity must demonstrate that it has a current ratio of at least 1:1 and sufficient net tangible assets to support the value of the loan. This ensures the loan is recoverable and represents a genuine asset. If the related entity does not meet these financial thresholds, the loan may be partially or fully disallowed in the NTA calculation, potentially putting the licensee at risk of non-compliance.
What do you need to do?
It is imperative that you review your financial position now to ensure compliance with these requirements. If you need assistance in preparing the necessary documentation or have any questions, contact your Moore Australia Advisor.
Further information can be found in this useful summary on the QBCC website.