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The new Minimum Financial Requirements (MFR) Regulation for QBCC licensees came into effect on 1 January 2019. Under the new the building and construction contracts regulations, all QBCC licensees who hold a contractor grade licence will be required to meet annual financial reporting obligations. The changes are being implemented in two phases.
The new regulation:
Existing category 4–7 licensees are to provide their most recent financial statements to the QBCC by 31 March 2019, while all other licenses have until 31 December 2019 to report.
The requirement for category 4–7 licensees to report a 20 per cent decrease in NTA will take effect from a licensee’s first annual reporting day. This is to ensure that category 4–7 licensees are not immediately in breach.
The QBCC will allocate an ongoing annual reporting day for licensees.
The remainder of the reforms will be implemented as part of Phase 2, commencing 1 April 2019. Key reforms include:
Personal recreational vehicles, such as dirt bikes and golf carts, can no longer be used to meet minimum asset thresholds.
Money held in a project bank account can be included as an asset of a licensee as follows –
If a licensee is relying on a Deed of Covenant and Assurance and/or related entity loans to help them meet the financial requirements, detailed financial information will need to be provided to the QBCC to substantiate.
The QBCC website has further information in respect of accounting requirements for:
Penalties for not complying with the Minimum Financial Requirements have been included in regulation. Under the Act, the QBCC can place conditions on a licence, or take steps to suspend or cancel a licence.
Penalties also apply for providing false or misleading information or refusing to supply financial information at the request of the QBCC.
To support the new MFR framework, the QBCC Act will be amended to include executive officer liability, escalating penalties for failing to meet requirements and new penalties for failing to provide financial information. These changes will ensure that the QBCC can effectively manage the new building and construction contracts regulations.
MGI South Queensland specialises in accounting, auditing and taxation in the construction industry. If you would like to find out more about how the current building and construction contracts regulations affect your business, contact us today on 07 3002 4800 today and let us shout you a coffee to discuss your requirements.
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