Myth 1: MFR reports are mandatory for annual reporting
We hear this one a lot. This is not true.
For most licensees annual reporting information does not need to have any accounting standards applied, does not need to be prepared by an accountant and can be based on a licensee’s most recent reporting/financial year information (i.e. 30 June).
An MFR report is only required in the following circumstances:
- when you apply for a new licence (licence Category 1 upwards, maximum revenue over $800,001)
- if your Net Tangible Asset position decreases by
- more than 20% for Category 4-7 licensees and
- more than 30% for all other licensees
- if your Maximum Revenue (MR) needs adjusting (MR must not be exceeded by more than 10% in each financial year)
- if we request it.
Myth 2: Licensees with a company and contractor licence only need to provide annual reporting for the company
This appears to be a common misconception.
Annual reporting is a mandatory requirement for most QBCC licensees with a contractor or company licence. If both an individual contractor and company licence are held (and is not an exempted licence class), annual reporting information would be required for both the individual and the company licence.
Myth 3: Holding a licence class exempt from MFR obligations means you never need to meet MFR
Not true.
There are exemptions to meeting MFR and we’ve listed them below. However, your exemption for these reasons only applies if you don’t hold a licence in another class that does impose MFR obligations.
MFR exemptions apply for applicants or licensees holding a licence in one or more of the following classes:
- Building design – low rise
- Building design – medium rise
- Building design – open
- Builder – Project Management Services
- Hydraulic services design
- Site classifier, or
- Is a special purpose vehicle operator.
Licensees who hold professional indemnity insurance, may be exempt from the financial reporting requirements. However, it is vital that licensees ensure the QBCC hold a current copy of their current PI Insurance policy at all times.
Myth 4: Annual reporting is not required every year
We’re not sure how this one got started. We thought the name said it all.
Annual reporting provides a health check for QBCC licensees to ensure they have a sustainable business with sufficient working capital to manage their contracted work and pay employees and suppliers.
Annual reporting must be provided every year by licensees who are captured by MFR obligations, regardless of the amount of work performed or revenue generated.
Myth 5: If you have lodged your annual reporting for the year you have met your MFR obligations
Again, this is false.
Annual reporting is a once a year submission based on the information required for the relevant reporting category. It must be lodged every year, on time. Licensees who do not lodge their annual reporting on time may have licence conditions imposed or have their licence suspended or cancelled.
MFR is the minimum net tangible assets (NTA) and current ratio required to ensure a business is financially sustainable and is an obligation for licensees at all times. This is based on the last accepted MFR report provided to the QBCC (which may have been some time ago, for some licensees).
A licensee’s compliance with MFR may require financial information at other times including:
- where the maximum revenue (MR) requires adjustment
- where the net tangible asset position has decreased by more than:
- 30% for licensees within categories SC1, SC2 and categories 1-3
- 20% for licensees within categories 4-7
- for an approved audit program
- on expiry of the licensee’s professional indemnity insurance policy
- significant change to the structure of the business (e.g. change of ownership or executive officers)
- restructure of partnership
- change or withdrawal of covenantors
- when requested by the QBCC.