Annual reporting for MFRs: Are you on track?

1 October 2019

With three months until the 31 December 2019 deadline, it’s imperative to prepare your business right now.

Self-certification categories (SC) 1 and 2 and category 1 to 3 licensees must provide the Queensland Building and Construction Commission (QBCC) with financial information by the end of the year.

While 31 December 2019 might seem like a world away – it’s important to get in early and be prepared.

However, the good news is that the QBCC have advised that providing you submit by the deadline, you'll have 12 months to strengthen the financial health of your business in line with the new laws.

Submitting your reports

There’s a few important things to note when submitting:

1. The reporting requirements for SC1 and SC2 licensees are different to Category 1 to 3 licensees – SC1 and 2 licensees must provide a declaration and some basic financial information, whereas Category 1 to 3 licensees need to provide more detailed information (profit and loss; balance sheet; statement of cash flow, etc).
2. There is a new requirement for SC2 licensees to have Net Tangible Assets to the value of $46,000.
3. The information doesn’t need to be prepared by an accountant; although if you already use an accountant, it will be easier to submit the latest information provided by them for your end of financial year tax reporting.
4. If you hold an individual and company contractor licences, you need to provide financial reports for both licenses.
5. SC 1 & 2 licensees are not able to use deeds of assurance or guarantees to meet their NTA requirements.

Traps and pitfalls

Beware the common traps that some licence holders have faced:

1. Problems arise when contractors with a company license have their assets protected within a family trust. The licence holder (ABC Company Pty Ltd as trustee for the ABC Family trust) must meet the Net Tangible Asset test, not the trust.
2. Depreciation Schedules on plant and equipment are often used by accountants to minimise tax. If your depreciation schedule is too aggressive, you may no longer meet the Net Tangible Asset test.
3. Some contractors assume that Work in Progress (WIP) is an asset, where you have earned the money but not yet invoiced the client. However, WIP for your business can be a negative, depending on the costs that are still to be incurred. Negative WIP will mean an additional liability in the NTA calculation.

Miss the reporting deadline?

Missing the reporting deadline is serious and the QBCC have made it clear they will act on licence holders who don’t submit. You risk licence suspension and having to pay a fine.

How to submit

You can upload your financial reports via the MyQBCC portal at www.qbcc.qld.gov.au

Info & resources

The QBCC's website is a great resource for information. They have also produced a Guide to Annual Financial Reporting, a set of user guides to help contractors and a short video explaining the requirements.

More info

Master Builders is here to assist. We can help you ensure you’re across what you need to know and what you need to do. Call 1300 30 50 10 or contact us.