In Queensland, individuals and companies must hold a QBCC licence to carry out:
- any building work valued over $3,300
- building work valued over $1,100 where it involves Hydraulic Services Design
building work of any value where it involves:
- Plumbing and Drainage
- Gas Fitting
- Termite Management – Chemical
- Fire Protection
- Completed Residential Building Inspection
- Building Design – Low Rise, Medium Rise and Open
- Site Classification
A contractor is carrying out building work if they are:
- personally carrying out the work
- directly or indirectly causing the building work to be carried out
- entering into a contract or submitting a tender for building work
- offering (quoting and tendering) to carry out building work
- taking payment or arranging payment of subcontractors
- arranging labour or arranging and conducting on-site meetings and inspections
- preparing plans and specifications
- coordinating the scheduling of work for building contractors even as an agent for another person
- obtaining engineering or soil reports, or arranging for certificates from Local government to be issued etc
- supervising building work
- providing advice or a report for a building
- contracting for work as a subcontractor to a builder.
It is important to understand what your requirements are for holding a QBCC licence. As a trade business owner and a licence holder, you need to make sure you are compliant with all QBCC licence requirements.
A current ratio shows the amount of current assets of a business in relation to its current liabilities and it helps determine your financial viability. If your revenue is more than $800,000, an accepted independent accountant will need to calculate this ratio as part of your MFR Report (PDF).
If your revenue is up to $800,000 you don’t need to provide the current ratio with your Declaration but if requested, you must demonstrate to the QBCC that you meet the current ratio. The minimum current ratio for a licensee is 1:1. You must have at least $1 in current assets for each $1 of current liabilities.
When upgrading your licence category you will be required to show that you meet or have greater than 1 current asset to 1 current liability. The classification of your assets on your balance sheet between current and non-current is important to perform this test.
You'll need to provide an MFR Report that shows that you meet the current ratio on the period ended date that the report is based on (e.g. 30 June).
You need to speak to a specialised adviser to make sure your business assets are accounted for properly. In our experience, clients that have attempted to supply the QBCC with self-generated reports have failed the test because of incorrect classification of assets.
Net Tangible Assets (NTA)
Net Tangible Assets (NTA) means the total assets of a business, less any intangible asset such as goodwill, patents and trademarks and less all liabilities. Your NTA will determine your maximum revenue (MR) for the forthcoming year. You must own your assets both legally and beneficially (e.g. real estate, cash, collectible investments) and they cannot include assets held on trust for another person or corporation.
All your liabilities must be taken into account. This includes any debts or obligations you must pay or settle within a certain period of time or pay on demand (e.g. amounts of related entity loans, shares etc.
What to do from here?
If you hold a QBCC licence, then you should have specialised advisers that work in the trade space. Being a trade business owner means your livelihood depends on being compliant with the QBCC regulations. This is one of the critical elements of your business! If you are unsure on what you need to do engage us today by calling (07)4616 9000. We have twenty years of experience helping businesses like yours succeed.
The information provided in this BLOG is of a general nature only and has been provided without considering your objectives, financial situation or needs. Because of this you should consider whether the information is appropriate considering your objectives, financial situation and needs.