QBCC Self Assessment - Is it Working? Do you Even Know About it?

It has been over a year since the QBCC introduced a new reporting regime and from what I have seen many tradespeople really don't have any idea things have changed. I wrote a blog back in September last year about the changes so won't repeat all of those details (CLICK HERE to read that post).

If you are a tradie and covered by the QBCC licensing regime then it is important to understand your "self certification and review" obligations.

Self Certification replaces the old annual review and means you have to regularly monitor (quarterly should be sufficient) your financial performance to ensure your Minimum Financial Requirements are met.

What are the Minimum Financial Requirements?

The Minimum Financial Requirements set out the level of asset backing you will need for your specific QBCC license class. The table below summarises those requirements by license.

Criteria Maximum Revenue Net Tangible Assets Information Required
SC1 Up to $200,000 $12,000 SC1 Declaration
SC2 Up to $600,000 $36,000 SC2 Declaration
min (a) max (b) min (c) max (d)
Category 1 $600,001 - $3,000,000 $36,001 - $156,000 MFR Report and
Financial Statements
Category 2 $3,000,001 - $12,000,000 $156,001 - $480,000 MFR Report and
Financial Statements
Category 3 $12,000,001 - $30,000,000 $480,001 - $1,200,000 MFR Report and
Financial Statements
Category 4 $30,000,001 - $60,000,000 $1,200,001 - $2,400,000 MFR Report and
Financial Statements
Category 5 $60,000,001 - $120,000,000 $2,400,001 - $4,800,000 MFR Report and
Financial Statements
Category 6 $120,000,001 - $240,000,000 $4,800,001 - 14,400,000 MFR Report and
Financial Statements
Category 7 >$240M NTA x 16.67 >$14.4M MFR Report and
Financial Statements


How is this Different to the Previous System?
 

What is different to the annual review regime is that the Net Tangible Assets for your business dictate your maximum permitted turnover and it is up to you to monitor it "regularly" to ensure you don't exceed your permitted turnover. You will also have to keep quarterly management accounts and copies of your calculations to show your NTA is appropriate for your turnover so you can provide them to the QBCC if they request them.

For example, you may have a Category 1 license which you could think would entitle you to charge your customers up to $3m in a year, right?

While it makes sense to make that assumption it is not correct. If your Net Tangible Assets is say $40,000 and you have a Category 1 license then your maximum permitted turnover is only $679,982. To reach the maximum permitted turnover for a Category 1 license you will need Net Tangible Assets of $156,000.

The calculation of your maximum turnover is complicated but for a Category 1 license each $100 increase in your Net Tangible Assets will allow you an extra $2,000 in annual turnover. For those who want to see the actual formula here it is in plain English:

(((Actual Net Tangible Assets - Minimum Net Tangible Assets) / (Maximum Net Tangible Assets -  Minimum Net Tangible Assets)) x (Maximum License Category Turnover - Minimum License Category Turnover)) + Minimum License Category Turnover

We have many construction industry clients, specialise in helping them make more money and pay less tax, and we basically love working with that industry. We want you to do the best you can so our numbers geeks have built a helpful little tool to enable you to review your NTA and license compliance.

How Can We Help? 

 

Don't make working in the construction industry any harder than it already is. The ATO are certainly not your friend with their suspicious approach and over the top reporting and compliance measures but QBCC compliance needn't add to your woes.

If the formula above does not make you shiver and you understand what is meant by Net Tangible Assets then we probably can't help. If however you are like the majority of our client QBCC licensees, and probably the majority of people in general too I suspect, then we can help you keep your quarterly reviews in order and make sure your license and livelihood is safe.

When it comes time to upgrade your license above the Self Certification 2 license then you will also need our independent certification that your financial position complies with the Category license terms.

The good news is that while making sure your Minimum Financial Requirements are compliant we can also provide you with some insight into your business and regular advice on your tax and financial obligations.

CLICK HERE to make a FREE No obligation appointment to have a chat about your QBCC license and business in general. Alternatively give the office a call on 54391600 and one of our team will be happy to help you out.