Understanding the details of QBCC Maximum Revenue is essential for construction and building businesses in Queensland. Here we address your key questions about QBCC Maximum Revenue requirements, helping you navigate your financial requirements and maintain compliance.
QBCC Maximum Revenue requirements refers to the maximum amount of revenue your building or construction business can generate within a 12-month period (typically the Financial year), as stipulated by the Queensland Building and Construction Commission (QBCC). This cap ensures that businesses operate within their financial capabilities, maintaining sufficient working capital and financial sustainability. By placing a limit on the revenue, QBCC aims to protect the financial integrity of the business and the interests of its clients.
Your QBCC Maximum Revenue is determined based on your Net Tangible Assets (NTA). The NTA is calculated by subtracting liabilities and disallowed assets from your total assets. Each QBCC financial category has specific NTA and Maximum Revenue requirements.
Whilst your licence might be granted in a Financial Category which covers a wider Maximum Revenue Range, it’s the Licencee’s NTA that determines the specific MR amount. For instance, if your NTA is $66,000, you have a maximum revenue of $1.2 million even though you would fall into the Category 1 band of $800,001 – $3M.
NTA = Assets − Liabilities − Intangible Assets − Disallowed Assets
|
Financial Category |
Maximum Revenue |
Net Tangible Assets (NTA) |
|---|---|---|
| SC1 | Up to $200,000 | $12,000 |
| SC2 | Up to $800,000 | $46,000 |
| Category 1 | $800,001 to $3M | $46,001 to $156,000 |
| Category 2 | $3M to $12M | $156,001 to $480,000 |
| Category 3 | $12M to $30M | $480,001 to $1.2M |
| Category 4 | $30M to $60M | $1.2M to $2.4M |
| Category 5 | $60M to $120M | $2.4M to $4.8M |
| Category 6 | $120M to $240M | $4.8M to $14.4M |
| Category 7 | Over $240M | Over $14.4M |
QBCC allows a leniency of 10% over your allowable turnover. For example, if your allowable turnover is $1.2 million, you can earn an additional $120,000 without breaching the requirements.
If you anticipate breaching your Maximum Allowable Revenue by 10% or more, you will need to apply to Increase your Maximum Revenue with the QBCC. This can also mean you fall into a different Financial Category. There are two big events when changing categories:
Moving from SC2 into Category 1 and Category 4 or above means you now need to submit General Purpose Financial Statements prepared by a qualified Accountant alongside a MFR and Licence uplift request.
In order to upgrade your Maximum Allowable Revenue, you will need a qualified accountant to prepare an MFR Report with financial statements that are no more than 4 months old. We strongly recommend taking a proactive approach with an Accountant who is experienced with QBCC MFR as there are some specific accounting rules that apply.
From a timing perspective, we typically allow at least a month for preparation and submission of an MFR Report including implementing the required steps to meet the new NTA position.
Failing to adhere to your MFR obligations can lead to severe consequences, including a full QBCC audit or the suspension and/or cancellation of your QBCC license. QBCC compliance action is generally triggered when a licensee’s annual reporting flags they do not meet MFR. Licencees are then required to prepare an MFR Report to show they are compliant or how they plan on becoming compliant via a commitment to a range of financial activities.
No, you must include all turnover (or income) earned from all sources, not just from building activities. This includes income from investments, other business activities, and any other revenue streams. However, salary or wages received as an employee, rather than as a contractor, are excluded.
Net Tangible Assets (NTA) play a crucial role in determining your QBCC financial category and Maximum Revenue amount. NTA represents the minimum Allowable assets the QBCC requires you to hold for the Maximum Revenue your business is looking to do. Your NTA is calculated based on your Balance Sheet (Assets less Liabilities) at the end of the reporting period (typically 30 June), adjusted for any Non-qualifying Assets per QBCC guidelines.
There are also reductions for Debtors that have been outstanding for longer than 180 days (50%) and 365 days (100%).
Maintaining the required NTA is essential for QBCC compliance, and any decrease beyond 30% (or 20% for higher categories) can affect your license status and lead to QBCC reviews and/or Audits.
As you move up the QBCC financial categories, the reporting requirements become more complex. Category 1-4 and above licences require Data to be reported to the QBCC annually along with General Purpose Financial Statements. This will generally always lead to a longer lead time when preparing these Financial Statements, as Accounting Standards need to be applied in greater detail.
When a MFR is required for either a Licence Application or a Request to increase / decrease your Maximum Allowable Revenue, the Reporting requirements are dependent on the License category you are seeking:
Staying within your QBCC Maximum Revenue limits requires diligent financial management and proactive planning.
Understanding and managing your Maximum Revenue is crucial for the success and sustainability of your building or construction business. By keeping track of your turnover, maintaining your NTA, and adhering to QBCC guidelines, you can avoid potential pitfalls and ensure your business thrives.
For expert assistance and a free consultation with our QBCC accounting team, don’t hesitate to reach out.
