New QBCC Minimum Financial Requirements
Article by Xact Accounting - 29 July 2019
If you’re in the building and construction industry, the hot topic right now is the changes by the QBCC to the Minimum Financial Requirements. One of the major changes is that you must now lodge reports annually to the QBCC, with 2019 being the first year.
It is important to be across these changes as we are currently seeing approximately 50% of building and construction businesses attempting to lodge their Annual Accounts are in breach! This could result in your QBCC licence being suspended or cancelled.
These changes are not that complex if your accountant understands the Building & Construction Industry and is across the QBCC regulations.
As partners of Master Plumbers' Association of Queensland, Xact Accounting pride ourselves on being specialists in this area, and we can assist you with meeting your Minimum Financial Requirements.
So, what are the major changes to the QBCC regulations?
With several high-profile insolvencies in recent years, the Queensland State Government and the Queensland Building and Construction Commission (QBCC) recognised that new laws were needed to reduce the number of insolvencies which had resulted in many subcontractors not being paid.
The main change – Annual Lodgement of your Financial Statements
If you are in the SC1 to 3 license categories, you will need to submit your financial information to the QBCC by 31 December 2019. Now that we are past 30 June 2019, it is your 30 June 2019 Financial Information that needs to be reported to the QBCC by 31 December 2019.
Our advice to clients is to act now. Ask your accountant to cue your 30 June 2019 Financial Statements immediately and ask them to test your compliance to the QBCC’s Minimum Financial Requirements when preparing your financial statements to ensure that you will pass the QBCC tests when you lodge.
If you fail the QBCC financial tests, there are things you can do to rectify this before your accounts are finalised, including recapitalising the company and forgiving debts owed by the company to the directors , just to name two.
What needs to be lodged with the QBCC?
Category 4 and above licensees had to report by 31 March 2019, therefore, we have not dealt with them, as this only applies to about 800 licensees in Queensland and they should all know what they need to do by now.
SC1 and SC2 Licensees do not need to lodge any documents, they simply need to advise the QBCC of their key financial data by 31 December 2019 and outline the type of trading entity they are using to operate their business.
Category 1 to Category 3 Licensees (Turnover $800K to $30M) need to lodge the following documents;
- Profit & Loss Statement
- Balance Sheet
- Accounts Receivable and Accounts Payable listing
QBCC is encouraging licensees to lodge electronically via their portal, however they have acknowledged that you may also lodge by paper.
What about 2020 and beyond?
The QBCC will advise you what your annual lodgement date will be in writing. The Financial Statements relied upon to lodge your annual QBBC report cannot be more than 4 months old, so our advice to you is as follows;
- Request a revision of the advised lodgement date and make it 31 October each year
- Ask your accountant to cue your 30 June 2020 annual Financial Statement work immediately after the end of the financial year so that these accounts can be used to lodge your annual QBCC report.
By doing this, you could potentially save thousands of dollars in accounting fees as your annual financial statements can also be used as the basis for the QBCC report.
We have set out a timetable below to help you understand the above.
Whilst the changes to the QBCC regulations are somewhat of a burden, they should protect more subcontractors from non-payment.
If you would like to discuss your options with us we are offering all MPAQ members a FREE 30 min consultation over the telephone with one of our QBCC MFR specialists. Give us a call on 07 3124 8666.
If you are not part of an association send us an email to firstname.lastname@example.org and we will organise a time to answer your questions at a low cost, fixed fee appointment.