Net tangible assets

To include an asset in when calculating NTA, you must own your it both legally and beneficially. For example:

• real estate
• cash
• plant and equipment
• tools of trade.

The following are disallowed assets pursuant to section 17 of the MFR Regulation 2018, and cannot be included in calculations:

• a recreational vehicle
• an unregistered vehicle
• a racehorse
• a collectors item
• contingent assets (AASB 137)
• personal furniture
• unlisted investments or shares
• non-monetary credits (including cryptocurrency, bartercard etc)
• investments valued using the equity method under AASB 128 for special purpose financial statements
• related entity asset loans that do not meet the definition outlined in section 15(1)(l) of the MFR Regulation 
• units in unlisted trusts
• superannuation that cannot be accessed by the licensee at the period end date
• trade or barter dollars and any equivalent scheme
• assets assured to another licensed entity through a Deed of Covenant and Assurance.
• boats, ships, jet skis, planes, helicopters, race horses and racing cars
• collectors' items (e.g. paintings, stamps, coins)
• contingent assets
• unvested superannuation benefits, and
• life or income protection insurance policy benefits.
• life or income protection insurance policy benefits
• 50% of the value of an invoice for debtors over 180 days
• 100% of the value of the invoice for debtors over 365 days
• the defined amount of a deed of covenant provided to another entity
• assets held on trust for another person or corporation.

NOTE—Accountants must indicate if related entity loan assets have been included, and must verify that they meet the definition of an acceptable asset under section 15(1)(l).

Intangible assets include, but are not limited to:

• goodwill
• right of indemnity
• intellectual property
• formation expenses
• value of trademark
• patents
• borrowing expenses
• deferred tax assets.

NTA is calculated from:

• personal assets and liabilities

NTA is calculated from:

• company assets and liabilities; or
• in combination with assets assured by one or more Director/s or a related body corporate of the applicant/licensee by way of a Deed of covenant and assurance (deed).  

NTA is calculated from either:

• the company's assets and liabilities
• in combination with assets assured by your partner by way of a deed.  

Evidence of a formal business Partnership agreement (PDF) must be provided where a deed is provided by the partner of the applicant. You cannot include the assets of the partnership but may include your personal EQUITY (OR LOSS) in the partnership in determining your NTA.

Example—If the partnership equity is $10,000 and you have a 40 per cent share within the partnership, equity of $4,000 may be included as a personal asset in your NTA.

For an individual:

NTA is calculated from either:

• personal assets and liabilities
• in combination with assets assured by one or more of the beneficiaries of the trust by way of a deed.  

For a company:

NTA is calculated from either:

• assets and liabilities of the trustee company, exclusive of the trust (e.g. $10 representing the issued share capital of the company) 
• in combination with assets assured by way of a deed from one or more of the following:
  • beneficiary of the trust
  • director of the licensee
  • related body corporate of the licensee.  

Assets and liabilities held in the trust cannot be taken into consideration in determining NTA and cannot be assured to the applicant through the use of a deed. However, the MFR framework must be applied to the financial information of the trust and any QBCC net tangible asset deficiency is a liability in calculating the net tangible asset position of the trustee.

• In calculating the net tangible assets for a trustee for a trust, the calculation does not include any assets held on trust.
• However, any asset deficiency in the trust for which the licensee is trustee, is a liability of the licensee and must be deducted from the trustee's net asset position.
• In determining the net tangible asset position, the MFR Regulation requirements must be applied, and any disallowed or intangible assets and related entity asset loan that does not meet definition of section 15(1)(l)  must be excluded from the calculation.

Note—A deed is only available for licensees in categories 1 to 7. Contractors in SC1 or SC2 categories are unable to rely upon a deed.