QBCC reintroduced annual reporting in January 2019 due to a number of high-profile insolvencies. QBCC wanted more oversight into the financial information of its licensees. Until recently most licensees had 31 December as their annual reporting date. QBCC has now started providing licensees with their new annual reporting dates which can be at any point during the year, so it will be important to keep an eye out for any QBCC correspondence.
What is QBCC annual reporting?
Annual reporting is designed to strengthen the financial condition of its licensees and ensure they have an appropriate level of working capital. It is important to note that a Minimum Financial Requirement (MFR) report is not required to meet the annual financial requirements and is much simpler to prepare.
A licensee is able to prepare the report themselves, however, we suggest your accountant is involved in the process to ensure compliance with the financial requirements.
When is my report due?
The QBCC annual financial report was due by the 31st December. However, this may change in 2021 as QBCC rolls out different reporting dates for different licensees. If you have missed the deadline, you will still need to lodge your annual report as soon as possible on the myQBCC online portal. You can also nominate a different annual reporting due date by contacting QBCC.
If you are not currently using your licence, an annual report is still required. You can report your turnover as $0 but sufficient net tangible assets (NTA) are still needed to support the license category. You may want to review whether you still need a QBCC licence and move from a contractor to a nominee license if you are no longer completing building work in your own name.
What financial information do I need?
What information needs to be provided will depend on your license category.
- Licence categories 1 to 7 - Profit and Loss Statement, Balance Sheet, Aged Debtors and Creditors listings, and a Statement of Cash Flow.
- Licence categories SC1 and SC2 - profit and loss figures, revenue and expense figures, and assets and liabilities.
The financial information provided will usually line up with your financial year ended 30 June. However, QBCC defines the most recent reporting year as your internal reporting period. Therefore if this differs from your financial year, you can report on different dates.
Financial indicators that are reviewed
When your original QBCC license was applied for, there were a number of financial indicators that were required e.g. net assets, current ratio. These indicators are also reviewed in the annual reporting to ensure each licensee is still compliant.
- Maximum revenue: Licensees cannot exceed their maximum revenue by 10%
- Current Ratio: A 1:1 ratio (current assets v current liabilities) must be held at all times
- NTA: Licensees must have the required level of NTA to support their revenue. You can check the level needed using QBCC online calculator here.
- Reduction in NTA: a decrease by more than 30% of assets (or 20% if category 4-7)
- NTA of at least $0: You must have an NTA in your own right of at least $0. This is particularly important for licensees who rely on a deed of covenant to meet their NTA.
What happens if I get it wrong?
If you fail to meet the annual reporting requirements there are several actions QBCC can take:
- Monetary penalties
- License suspension
- License cancellation
If you do not meet the reporting requirements, we suggest lodging your annual report on time regardless then call QBCC to discuss your options. Getting on the front foot will always achieve a better outcome. Often they will just require another MFR report to be prepared and signed off by an Accountant.
If you need any help lodging your annual report contact Link Advisors and we can guide you through the process.