For QBCC licence holders 2019 has been a year of significant change. One of many was the release of the new Minimum Financial Requirements, requiring the lodgement of financial data on an annual basis with the QBCC.
With categories four to seven ($30m plus turnover) having already lodged their data with the QBCC earlier this year, this will be the second time round that information will be lodged. For all licensee categories SC1 through to four (up to $30m turnover) this will be the first time that you will be lodging financial data with the QBCC or risk having your licence suspended.
After assisting a number of lodgements earlier this year, and dealing with several problems resulting from this, we have listed out our top tips to consider when making your lodgement:
- Lodge everything that is required, or you have not complied with the annual reporting requirements. This might sound obvious, but you need to lodge more than a set of financial statements. For example, licence categories one to three now need to include aged debtors and creditors. For more information refer to your licence category here.
- Check that you are meeting the financial requirements before lodgement. This is one of the most common mistakes that we have seen at Mage Advisory. Hit and hope is not a strategy. We have seen several lodgements where the licensee did not realise that they were not meeting the requirements when lodging. A review by someone experienced with the requirements would have very quickly identified the issues before the QBCC did.
- If you aren’t meeting the financial requirements what are you doing to become compliant again? It’s a lot easier to do this prior to lodgement when you have more control over timelines. We have been involved in several restructures of groups to ensure they become compliant.
- Check the maximum revenue you can do with the QBCC. If you have exceeded your maximum revenue by more than 10 per cent you need to have your accountant prepare and sign off on a fresh MFR report – showing that you have the assets to do the higher turnover. Don’t wait to receive the QBCC threat of suspension notice as you may need to stop work as you become compliant again.
- Beware Related Party Loan Assets. If your licensed business has made loan advances to related entities, such as you personally, other companies or trusts you control, it has become very difficult to include these as QBCC assets. Before they are included as assets the related entity will need to have net assets and pass the current ratio based on the QBCC regulations. Easier said than done in our experience. We have seen many of these already fall foul of the regulator and expect to see many more.
- If your business is incorporated, with you acting as nominee, but you still hold an SC1 or SC2 licence in your own name than you still need to provide financial information despite not trading under this licence. In this case there is an easy solution to reduce your licence class to nominee only. If you don’t do this and don’t provide financial information you may get suspended, which in turn may have your company suspended.
Don’t wait to receive the QBCC threat of suspension notice as you may need to stop work as you become compliant again.
By now most builders will be aware that the QBCC is taking a very hard line around non-compliant licensees and have well and truly geared up to review your financial data. For every dispute that has made the papers, thinking, Laing O’Rourke, Grocon, Simonds Homes, there are far more that haven’t made the papers. We have assisted in QCAT tribunal matters and assisted accountants and builders under threat of suspension or already suspended. Let us assist you before it’s too late.
Michael Garrone and Ashley Garrone are trusted figures in the industry, assisting builders since 1999 when the financial requirements were first introduced. We work with accountants and business owners to assist them in getting this right. This publication is © Mage Advisory and is for general guidance only. Legal and financial advice should be sought before taking action in relation to any specific issues.