QBCC MFR Report & Accounting

QBCC use the Minimum Financial Requirements (MFR) to ensure that those operating in the industry are financially healthy enough to potentially withstand financial shocks that occur from time to time. Their intention is to use MFR to isolate operators that are posing a risk to the industry and consumers.​

The Financial Category Codes (often referred to as Cat Codes – e.g. Cat 1) determine the core requirements of MFR, including aspects like Maximum Allowable Turnover (MAT) ranges and the Net Tangible Assets (NTA) required to support the relevant MAT. There are also specific reporting requirements for different financial categories in relation to what you must report and when. ​

The table below provides an overview of the categories and associated requirements.
Note: Builders cannot take out an SC1 licence – they must start with an SC2 at a minimum.​

Maximum Revenue: This is the maximum amount that you are allowed to turnover each financial year, including a 10% buffer on your stated MAT. Note this is actual revenue —not forward orders or contract value. QBCC use this as a way of defining the size of a licensee, with the core principle being, the larger the business the more risk it represents in terms of impact to the industry and consumers if it failed.

Net Tangible Assets: To trade in the building industry in Queensland, you need to demonstrate you hold sufficient assets for your license category and annual turnover.

Current Ratio: Your total current assets (e.g. cash, accounts receivable, stock, Work In Progress) need to be greater than your total current liabilities (e.g. outstanding bills, trade creditors, tax obligations). Current Assets and liabilities are those amounts that will fall in the next 12 months.

The QBCC will allow you to exceed your MAT by up to 10 per cent in a financial year. If you believe you are going to exceed the 10% threshold you must apply for a license uplift which will include an MFR report – this must be done before the 10 per cent threshold is exceeded.

If you do exceed your MAT without upgrading your license you may be subject to a QBCC audit.

Your short-term liquidity, or ability to meet short-term debts, is determined by the ratio of your current assets to your current liabilities.

To meet your current ratio requirements your total current assets (e.g. cash, accounts receivable, stock, Work In Progress) need to be greater than your total current liabilities (e.g. outstanding bills, trade creditors, tax obligations). Current Assets and liabilities are those amounts that will fall in the next 12 months.

These are the total assets owned by your business (less intangible assets which include such things as trademarks, borrowing costs, patents, and goodwill). Your NTA determines the maximum amount of revenue you can turnover in the financial year.

The correct calculation and classification of your assets and liabilities is critical – as specialist building industry accountants we can ensure your financials are reported accurately.

Your short-term liquidity, or ability to meet short-term debts, is determined by the ratio of your current assets to your current liabilities.

To meet your current ratio requirements your total current assets (e.g. cash, accounts receivable, stock, Work In Progress) need to be greater than your total current liabilities (e.g. outstanding bills, trade creditors, tax obligations). Current Assets and liabilities are those amounts that will fall in the next 12 months.

Category 1 to 7 licensees must lodge their annual financial report by 31 December each year.
Categories SC1 and SC2 must lodge their financial reports by 31 March each year.

NOTE: It is also important to test your financial position before lodging your annual report to prevent a QBCC Audit, should you fail your minimum financial requirements.

Licensees can lodge via QBCC’s online portal or in paper if they prefer.

We strongly recommend you work with a specialist building industry accounting firm like Xact Accounting to test your financial reporting before lodging to avoid unwanted action with the QBCC.

We can also lodge your annual financial report on your behalf.