MFR report or declaration
The requirement for an MFR report or declaration is triggered in certain circumstances when you need to demonstrate you meet the minimum financial requirements to sustain your business.
An MFR report is not required to meet your annual reporting obligations.
What is an MFR report?
An MFR report or declaration demonstrates to the QBCC that you have:
- enough working capital—net tangible assets
- in relation to your debts—current ratio
- for your intended and allowable annual turnover—maximum revenue.
Depending on your annual turnover (and financial category) this may take the form of a
- MFR declaration – prepared by SC1 and SC2 licensees
- MFR report – prepared by an accountant for Cat 1-7 licensees.
When is an MFR report or declaration required?
Licensees will be required to report their financial information or continued compliance with the Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018 at certain times.
Typical scenarios
Typical scenarios when you may need an MFR report or declaration include:
- applying for a new contractor-type licence
- increasing your maximum revenue—you must not exceed your MR by more than 10% in each financial year without reporting it to the QBCC.
- reporting a decrease in net tangible assets (NTA)
- more than 30% for licensees within categories SC1, SC2 and categories 1-3
- more than 20% for licensees within categories 4-7
Other scenarios
Other scenarios requiring an MFR report include:
- if a licensee has a significant change to the business (change to trustee, change to directors or shareholders, restructure of a partnership)
- change or withdrawal of a covenantor
- if we request it.
NOTE – if you hold an exempt licence class and QBCC does not hold a copy of your current professional indemnity insurance policy, you would be required to meet the Minimum Financial Requirements.
Corporate Group requirements—for when providing an MFR Report
Applies if a licensed company is part of a corporate group.
The licensed entity can elect to provide its’ financial information on a standalone basis, or on the corporate group’s financial position.
What is a corporate group?
A corporate group means all corporations that are a party to the same deed of cross guarantee, also referred to as a closed group.
There are different types of consolidation:
- Consolidated - where all entities’ financial information is included for the consolidation of the group
- Closed group - where only the entities’ financial information who are part of the same deed of cross guarantee is included.
We can only accept the closed group consolidation for reporting purposes under the MFR Regulation. Therefore, if the corporate group's financial information is being relied upon for an MFR Report, then the financial statements must be based on the closed group only i.e. only entities in the group that are a party to the same deed of cross guarantee.
Who can prepare an MFR report?
Qualified accountants must prepare MFR reports
A licensee must ensure an MFR report is prepared by a qualified accountant. A qualified accountant is someone who:
- meets the requirements of a qualified accountant outlined in the ASIC Corporations (Qualified Accountant) Instrument 2016/786, or
- is a Registered Company Auditor, or
- holds a current public practising certificate from the Association of Taxation and Management Accountants or National Tax and Accountants Association.
Accountant must be independent of the licensee
The qualified accountant must also be independent of the licensee.
An accountant is not independent of the licensee if the accountant is a related entity of the licensee or any of the following:
- an employee of the licensee
- an executive officer, investor, or shareholder of the licensee
- a partner in the partnership of the licensee.
The QBCC Commissioner does not need to approve qualified accountants for the purpose of preparing MFR reports.
Potential scenarios for each financial category
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Licensees with maximum revenue up to $200,000 (SC1) can use an MFR declaration to state that they meet minimum financial requirements in most circumstances. This option is not available to licensees in a builder class.
The declaration states you have:
- maximum revenue up to $200,000
- net tangible assets of at least $12,000.
When to submit
Scenarios requiring an MFR declaration to be submitted to us:
- new licence application—declaration is on the licence application form
- maximum revenue adjustment
- NTA decreases by more than 30%.
Scenarios requiring an MFR report to be submitted to us:
There may be particular circumstances that trigger the QBCC to request an MFR report and further financial documents, such as if you operate under a trust.
Complete an MFR declaration
Learn how to complete an MFR declaration.
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Licensees with maximum revenue up to $800,000 (SC2) can use an MFR declaration to state that they meet minimum financial requirements in most circumstances. The declaration states you have:
- maximum revenue up to $800,000
- net tangible assets of at least $46,000.
When to submit
Scenarios requiring an MFR declaration to be submitted to us:
- new licence application—declaration is on the licence application form
- maximum revenue adjustment down to SC1 (Not available to licensees in a builder class)
- NTA decreases by more than 30%.
Scenarios requiring an MFR report to be submitted to us:
- maximum revenue adjustment up to Cat 1 or above
Complete an MFR declaration
Learn how to complete an MFR declaration.
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Licensees with maximum revenue up to $30,000,000 (Categories 1-3) must use an MFR report to state that they meet minimum financial requirements.
For categories 1-3, an MFR Report can be prepared using Special Purpose Financial Statements (all relevant accounting standards need to be applied).
When to submit
Scenarios requiring an MFR report to be submitted to us:
- new licence application
- maximum revenue adjustment
- change of licence type: nominee supervisor to contractor
- change of ownership of office holders
- restructure of partnership
- change or withdrawal of covenantors
- revoking a deed
- NTA decreases by more than 30%.
Prepare an MFR report
Learn more about
If downgrading from from Cat 1-7 to a SC1 or SC2 licensee (SC1 or SC2), you must also provide:
- Application to change of maximum revenue form and;
- MFR Declaration for Maximum Revenue $200,000 (SC1) or $800,000 (SC2) and;
- A profit and loss and balance sheet for the most recent quarter ending (ie either 30 June, 30 September, 31 December, or 31 March). There is no 4 month age requirement for this information.
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Licensees with maximum revenue $30,000,001 and over (Categories 4-7) must use an MFR report to state that they meet minimum financial requirements.
For categories 4-7, an MFR Report must be prepared using General Purpose Financial Statements.
When to submit
Scenarios requiring an MFR report to be submitted to us:
- new licence application
- maximum revenue adjustment
- change of licence type: nominee supervisor to contractor
- change of ownership of office holders
- restructure of partnership
- change or withdrawal of covenantors
- revoking a deed
- NTA decreases by more than 20%
- if requested by QBCC.
Prepare an MFR report
Learn more about
If downgrading from from Cat 1-7 to a SC1 or SC2 licensee (SC1 or SC2), you must also provide:
- Application to change of maximum revenue form and;
- MFR Declaration for Maximum Revenue $200,000 (SC1) or $800,000 (SC2) and;
- A profit and loss and balance sheet for the most recent quarter ending (ie either 30 June, 30 September, 31 December, or 31 March). There is no 4 month age requirement for this information.
Excluded accountants cannot prepare MFR reports
If an accountant has been excluded under the QBCC Act and given an exclusion notice by the QBCC, they cannot prepare MFR reports.
An accountant can be excluded by the QBCC if within the previous 3 years, the accountant has done any of the following:
- given information they knew to be false or misleading to a licensed contractor, or to the QBCC, in relation to a licensed contractor's satisfaction of the MFR
- failed to comply with the MFR in relation to information required to be given to the QBCC
- not complied with a requirement in a previous exclusion notice given to the accountant.
Excluded accountants will not be able to prepare MFR reports for QBCC licensees for a period of 3 years.
You can check the register of excluded accountants to find out if an accountant has been excluded under the QBCC Act.
How to complete an MFR report or declaration
If your annual turnover is below $800,000 (SC1 and SC2 licensees), you will only need to provide us with a MFR declaration to demonstrate you meet minimum financial requirements, unless we have explicitly requested an MFR report.
If it has been determined that your maximum revenue is in financial category 1 to 7, then you will need to have an independent qualified accountant complete an MFR report when demonstrating to us that you meet minimum financial requirements.
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If you are applying for a licence, you can complete the MFR declaration in the licence application form.
For all other scenarios you can download and complete the relevant declaration:
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You can lodge the declaration to us with any other documents for the declaration relates:
- in person at a service centre
- by mail
- through our online form when logged in to myQBCC.
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Currency of financial information
The financial information provided for an MFR report must be:
- no more than 4 months old as at the day the report is signed by a qualified accountant
- signed by a qualified accountant no more than 30 days before the day the report is given to the commission.
The licensee is responsible for providing accurate financial information to the independent qualified accountant.
Required documents
The supporting documents that must accompany an MFR report include the documents below.
For categories 1-3, an MFR Report can be prepared using Special Purpose Financial Statements (all relevant accounting standards need to be applied).
For categories 4-7, an MFR Report must be prepared using General Purpose Financial Statements.
- Financial statements prepared under the prescribed accounting standards, including:
- a profit and loss statement
- a balance sheet
- an aged debtors and creditors report that includes the date each invoice is due to be paid or received
- a statement of cashflows.
- Notes to the financial statements mentioned in point 1 required under the prescribed accounting standards.
- A declaration signed by the licensee, or an executive officer of the licensee, verifying the information contained in the documents mentioned in point 1 and 2 above.
- A description of:
- the measurement, within the meaning of the prescribed accounting standards, on which the financial statements mentioned in point 1 are based
- the accounting policies or reports relevant to the financial statements.
- For a category 4, 5, 6 or 7 licensee—details of each debtor for the licensee, categorised according to whether the amounts owing became due and payable in the following periods:
- less than 90 days before the day the statements are made
- 90 to 179 days before the day the statements are made
- 180 to 365 days before the day the statements are made
- more than 365 days before the day the statements are made.
Note the requirements for different business or finance structures:
- If the licensee is trustee for a trust—the signed financial statements of the trust and the trustee
- If the licensee is a partner in a partnership—the signed financial statements of the partnership and the partner
- If the MFR report relies upon a deed of covenant and assurance—a completed Covenantor's statement of financial position (PDF, 66KB) for each covenantor.
Stated NTA for financial category
An accountant completing the MFR report may restrict the licensee's maximum revenue to the category required by stating the NTA as only the amount required for the level of maximum revenue being sought.
Example—Licensee has an NTA of $250,000 which would provide for a maximum revenue of more than $5.6 million. If the licensee only wants an MR of $3,000,000, the accountant can restrict the MR to $3,000,000 by stating 'at least' $156,000 NTA in the MFR report.
Consolidated companies
Where the company operates within a group of companies, it may rely on the consolidated accounts of the group if either:
- the company is the parent entity of the group
- the company is a subsidiary within the group, and is party to a deed of cross guarantee (ASIC Class Order 98/1418 or similar).
The MFR report should be completed based on either:
- the consolidated group of companies
- the "closed group" of companies—being only those companies subject to the deed of cross guarantee
- the company, in its own right, as a stand-alone company.
The company must provide evidence that the deed of cross guarantee was in place for the period of review on which the report is based and continues to be in place for the forthcoming financial year.
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Download and complete the relevant report template:
MFR report for Cat 1-3 (PDF, 64KB)
MFR report for Cat 4-7 (PDF, 68KB)
Sections of the form must be completed and signed by both:
- the licensee
- the independent accountant.
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You can submit your MFR report and supporting financial information to us:
- in person at a service centre
- by mail
- through our online form when logged in to myQBCC.
