Your QBCC licence is the most valuable thing your business owns, and it is the one asset that can be taken off you for a paperwork failure. Plenty of profitable builders have found that out the hard way: the work was good, the jobs were won, and the licence still came under condition because a ratio slipped or a report went in late. Crest Accountants has worked with Queensland construction and trade businesses since 1973, and we handle the QBCC side properly, so the financial requirements stay a background task instead of an emergency.
We prepare and lodge QBCC financial reporting for licence applications, annual reporting, maximum revenue increases and licence upgrades, for licensees on the Gold Coast, in Brisbane and right across Queensland.
Which QBCC financial obligation actually applies to you
Most of the confusion in this area comes from three different obligations being talked about as if they were one. They are not. Work out which of these you owe before you do anything else, because two of them may not need an accountant at all.
An MFR declaration, for SC1 and SC2 licensees
If your approved maximum revenue is up to $800,000, you sit in category SC1 or SC2 and you generally satisfy the QBCC by making a declaration rather than commissioning a full report. You are declaring that you hold net tangible assets of at least $12,000 for SC1 or at least $46,000 for SC2. You sign it yourself. The QBCC can still ask for a full report in particular circumstances, but the ordinary path for a smaller licensee is a declaration.
An MFR report, for Categories 1 to 7
Once your maximum revenue passes $800,000 you are in Category 1 or above, and the declaration is no longer enough. You need an MFR report prepared and signed by a qualified accountant who is independent of you.
An MFR report is not an annual event. The QBCC requires one in defined situations: when you apply for a new licence in Category 1 or above, when your net tangible asset position falls by more than the allowable amount for your category, when you need your approved maximum revenue changed, or when the QBCC asks for one. Categories 1 to 3 can be supported by special purpose financial statements. From Category 4 up, the report has to be built on general purpose financial statements, with the notes and accounting policies that go with them.
Annual financial reporting, which is a separate thing again
Annual financial reporting is the once-a-year submission that shows you still meet your requirements. It is not the same as an MFR report and it does not replace one.
Two points here save a lot of wasted effort. First, individual licensees in SC1 and SC2, with approved maximum revenue up to $800,000, are not required to lodge annual financial reporting at all. All company licensees are, whatever their category, so an SC1 company still reports even though an SC1 sole trader does not. Second, for most categories the annual submission does not have to be prepared by an accountant. Your tax reporting information will usually carry it.
We will tell you when that is the case. It is not much of a business model to charge a sole trader for a lodgement they do not owe, and the QBCC is explicit that lodging your annual report does not by itself mean you meet the minimum financial requirements. Compliance runs continuously off your last accepted position. The annual submission is a check-up, not a clearance.
QBCC financial categories, maximum revenue and net tangible assets
The regime works backwards from the way most people assume. Your net tangible assets set your ceiling. The QBCC works out how much turnover your balance sheet can carry, and that becomes your approved maximum revenue. You do not pick a category and then find the assets to match it.
| Financial category | Maximum revenue | Net tangible assets required |
| SC1 | Up to $200,000 | $12,000 |
| SC2 | Up to $800,000 | $46,000 |
| Category 1 | $800,001 to $3,000,000 | $46,001 to $156,000 |
| Category 2 | $3,000,001 to $12,000,000 | $156,001 to $480,000 |
| Category 3 | $12,000,001 to $30,000,000 | $480,001 to $1,200,000 |
| Category 4 | $30,000,001 to $60,000,000 | $1,200,001 to $2,400,000 |
| Category 5 | $60,000,001 to $120,000,000 | $2,400,001 to $4,800,000 |
| Category 6 | $120,000,001 to $240,000,000 | $4,800,001 to $14,400,000 |
| Category 7 | More than $240,000,000 | More than $14,400,000 |
You are allowed to exceed your approved maximum revenue by up to 10% in a financial year without asking first. If you expect to go past that, you have to give the QBCC a new declaration or MFR report showing the equity to support the higher figure before you exceed it. This is the trap that catches good businesses rather than struggling ones. A strong year, a large tender that lands, and suddenly growth is the thing threatening the licence. The fix is to see it coming, which means someone has to be watching your run rate against your approved ceiling during the year rather than after it.
Your net tangible asset position also has to hold. If it drops by more than 30% for licensees in SC1, SC2 and Categories 1 to 3, or by more than 20% for licensees in Categories 4 to 7, you have to demonstrate your position to the QBCC with an MFR report. A single bad quarter, a director loan repaid, or a large asset written down can be enough.
The two tests you have to pass every day
There are only two financial tests at the heart of the minimum financial requirements, and both are simple to state.
The first is net tangible assets. Total assets, less liabilities, less intangible assets, less anything the QBCC disallows. It has to be at least the amount set for your category.
The second is the current ratio, which must be no less than 1:1. Current assets divided by current liabilities, with at least a dollar of current assets for every dollar of current liabilities. There is no rounding. A ratio of 0.9987:1 fails.
Here is the part that trips people up, and almost nobody explains it. Both tests apply at all times, not just on the day you report. The financial statements you lodge are evidence of your position, not the definition of it. If your ratio drops below 1:1 in March and recovers by June, you were non-compliant in March. That is why we would rather look at your numbers quarterly than meet you once a year with a problem that has already happened.
Assets the QBCC will not count towards your net tangible assets
A balance sheet that looks healthy to a bank can fail the MFR test, because the QBCC excludes categories of assets that ordinary accounting happily recognises. Under the MFR Regulation, the disallowed list includes:
- Recreational vehicles, unregistered vehicles, racehorses and collectors’ items
- Boats, ships, jet skis and aircraft
- Cryptocurrency and non-monetary credits
- Unlisted investments, shares and trust units
- Superannuation that is not accessible at the end of the reporting period
- Goodwill, patents, trademarks and other intellectual property
- Assets held in trust for someone else
- Related entity loan assets that do not meet the regulatory definition
Trade debtors are discounted too. Half the value of invoices outstanding more than 180 days comes out, and the full value of anything outstanding more than 365 days. Liabilities get no such treatment. Nothing can be removed from the liability side, including related entity loans owed by the business.
The practical effect is that the ute you registered to the company, the boat, the crypto and the goodwill on your last acquisition can all be doing nothing for your licence. We work out the QBCC position, not just the accounting one, so you know which number actually governs your ceiling.
The deadlines and timing traps
For licensees in Categories 1 to 7, annual financial reporting can be lodged from 1 August and is due by 31 December. Company licensees in SC1 and SC2 work to a different date: their annual reporting is due by 31 March each year. The annual reporting requirement for SC1 and SC2 individual licensees has been removed altogether. The QBCC confirms your reporting day in writing, so check the date on your notice rather than assuming the Category 1 to 7 window applies to you.
The MFR report itself carries two timing rules that decide when you actually need to pick up the phone. The financial information supporting the report must be no more than four months old when the accountant signs it. The signed report must then reach the QBCC no more than 30 days after the day it was signed.
Read those together and one date falls out of it that is worth writing down. A report built on 30 June figures has to be signed by 31 October, because after that the figures are more than four months old and can no longer support the report. Leaving a licence application or a maximum revenue increase until later in the year usually means paying to have interim accounts prepared as well, because the year-end numbers have aged out. Start it in the second half of the calendar year and you are frequently doing the work twice. That single piece of sequencing is the most valuable thing an accountant brings to this job, and it costs nothing to get right if the conversation happens early.
Who is allowed to prepare and sign your MFR report
Not every accountant can sign an MFR report, and finding that out four weeks into an application is an expensive way to learn it. The QBCC sets two tests.
The first is qualification. The accountant must meet the definition of a qualified accountant under ASIC’s Corporations (Qualified Accountant) Instrument, or be a registered company auditor, or hold a current public practising certificate from the Association of Taxation and Management Accountants or the National Tax and Accountants Association.
The second is independence. The accountant must be independent of the licensee, which means they cannot be an employee, executive officer, investor, shareholder or partner of the business. Your in-house finance manager cannot sign it. Neither can your business partner, however qualified they are.
Before we start any MFR engagement we confirm the signing requirements are satisfied for your particular structure, because the answer changes depending on how you are set up. It is a five minute check at the start that avoids a rejected lodgement at the end.
What happens if you miss a deadline or fall below the requirements
Failing to comply with your annual financial reporting obligations is an offence, not an administrative slip. The QBCC’s own position is that late annual reporting can lead to conditions being placed on your licence, and to suspension or cancellation. A conditioned licence is often the worst commercial outcome of the three, because it does not stop you trading, it just quietly caps the size of the work you are allowed to take on, right at the moment you need turnover.
If you are already behind, the position is usually recoverable, and the worst thing you can do is wait. There is generally more that can be done before a lodgement than after one. Timing when the report is signed, resolving how related entity loans and trust assets are treated, dealing with aged debtors that are dragging on your ratio, and documenting genuine support from a related entity all sit on the table while the report is still being prepared. Once a deficient report is lodged and assessed, you are arguing rather than planning. If you have a notice from the QBCC in front of you, call us before you respond to it.
Why QBCC licensees choose Crest Accountants
Crest has worked with Queensland businesses since 1973, and construction and trade is a core part of the practice rather than a sideline. If you want the wider picture, our page on the broader accounting side of a construction business covers retentions, work in progress, subcontractor obligations and tax planning. This page is about the licence.
Our work is done in-house rather than sent offshore. We quote before we start, so the fee is agreed rather than discovered. And we will give you the numbers in plain English, including the parts you will not like, because a builder who understands why their ratio is tight can do something about it. A builder who is handed a compliant report and no explanation cannot.
Talk to a QBCC accountant before your deadline, not after it. Call Crest Accountants on 07 5538 0999 or send an enquiry through the contact form, and tell us your licence category and where you are up to.
QBCC accountants for licensees across Queensland
We are based at 5-7 Prosper Crescent, Burleigh Heads, and a good number of our construction clients are Gold Coast and Brisbane builders who like being able to sit across a table. Just as many are not. Our reporting and bookkeeping run in the cloud through Xero, MYOB and QuickBooks, and we act for QBCC licensees throughout Queensland, including the Sunshine Coast, Toowoomba, the Darling Downs, Central Queensland and the far north, as well as clients elsewhere in Australia. A QBCC licence is a Queensland licence wherever you pour the slab, and the reporting is the same job from Coolangatta to Cairns.
Frequently Asked Questions
An MFR report is the financial report the QBCC uses to confirm a licensee meets the minimum financial requirements for their category. It sets out your net tangible assets, your current ratio and the maximum revenue your position supports, and it has to be prepared and signed by a qualified accountant who is independent of you. It is required for licensees in Categories 1 to 7, which begins at maximum revenue above $800,000. Licensees in SC1 and SC2 generally provide a declaration instead.
Often, no. Annual financial reporting is a separate obligation from an MFR report, and for most categories it does not have to be prepared by an accountant. Your tax reporting information will usually cover it. Individual licensees in SC1 and SC2 are not required to lodge annual reporting at all, although all company licensees are, regardless of category. Where we add value is making sure the figures you lodge actually show compliance, because submitting the report is not the same as meeting the requirements.
For Categories 1 to 7, you can lodge from 1 August and it is due by 31 December. Company licensees in SC1 and SC2 are due by 31 March each year instead, and SC1 and SC2 individual licensees are no longer required to lodge annual reporting at all. The QBCC confirms your reporting day in writing, so check your notice rather than assuming the same window applies. If you are working to 30 June figures for an MFR report, the separate date to watch is 31 October, the last day those figures are current enough to sign against. Leaving it to the last fortnight is a common and avoidable mistake, because if the figures show a problem there is no time left to do anything about it.
It depends on your category. SC1 requires at least $12,000 and SC2 at least $46,000. From Category 1 the requirement scales with the turnover you want approved, starting at $46,001 for maximum revenue above $800,000 and rising through each category. The important point is the direction of travel: your net tangible assets determine the maximum revenue the QBCC will approve, not the other way around.
At least 1:1, meaning current assets at least equal to current liabilities. There is no rounding, so a ratio just under 1:1 fails. It also has to be met at all times, not only on the day you report, which is why we would rather review it with you through the year than discover a breach that happened months ago.
They can if they meet the QBCC’s two tests. They must be a qualified accountant under ASIC’s Corporations (Qualified Accountant) Instrument, or a registered company auditor, or hold a current public practising certificate from the Association of Taxation and Management Accountants or the National Tax and Accountants Association. They must also be independent of you, which rules out an employee, executive officer, investor, shareholder or partner of the business. Check this before the work starts rather than after, because a report signed by someone who does not qualify is wasted.
You can exceed it by up to 10% in a financial year without prior approval. Beyond that, you must give the QBCC a new declaration or MFR report showing you have the equity to support the higher turnover before you exceed it, not afterwards. This catches growing businesses far more often than struggling ones, so if you are tracking well ahead of budget it is worth a conversation early in the year.
No. Our office is in Burleigh Heads and many of our construction clients are local, but we act for QBCC licensees across Queensland and for clients based elsewhere in Australia who carry out building work in Queensland. Because our reporting and bookkeeping run in the cloud, where your business is based makes no practical difference to how we work with you.
General advice disclaimer
The information on this page is general in nature and does not take into account your objectives, financial situation or needs. Crest Accountants is not an AFSL holder and does not provide financial product advice. QBCC financial requirements depend on your licence category, structure and circumstances. Before acting, seek advice about your own position.
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The Australian Taxation Office (ATO) has reminded businesses that pay contractors for certain services that they may need to lodge a Taxable Payments Annual Report
Get your QBCC reporting handled by people who do it every week.
Call Crest Accountants on 07 5538 0999 or send an enquiry through the form to talk through your licence category, your deadline and what your position actually looks like.
