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QBCC minimum financial requirements, explained
If you hold a QBCC contractor licence, your balance sheet decides how much work you are allowed to do. Here is how the minimum financial requirements (MFR) work.
The three tests
- Net tangible assets (NTA): what the business owns minus what it owes, excluding intangibles. It must be at least $0, and high enough to support your turnover.
- Current ratio of at least 1: current assets divided by current liabilities, not rounded up, at all times.
- Maximum revenue (MR): your NTA sets a cap on annual turnover.
The financial categories
QBCC groups licensees into nine categories by NTA and maximum revenue. For example: SC1 needs $12,000 NTA for up to $200,000 revenue; SC2 $46,000 for up to $800,000; Category 1 covers $800,001 to $3 million; Category 2 $3 million to $12 million; Category 3 $12 million to $30 million; and Category 4 $30 million to $60 million. Check QBCC’s table and NTA/MR calculator for your figures.
What QBCC expects you to do
- Prepare quarterly management accounts.
- Pay debts as and when they fall due.
- Tell QBCC and apply to update your MR before you exceed it by more than 10%.
Where it bites growing builders
Growth eats working capital. A good year of contracts can push you past your maximum revenue before your NTA catches up, and related-party loans or poorly classified assets can reduce what counts. Planning the balance sheet before you sign bigger jobs is far easier than fixing it at renewal.
See the QBCC annual reporting checklist and Construction accounting in Brisbane.
Quick answers
What current ratio does QBCC require?
At least 1, at all times, per the MFR regulation.
What NTA does QBCC Category 2 need?
Between $156,001 and $480,000, for maximum revenue of $3 million to $12 million, per QBCC’s table.
Want this looked at for your business?
Book a free 15-minute Financial Health Check with Tereza, our practice manager. We look at income, tax, the business, mortgage, insurance and super in one go. Short on time? Grab a 5-minute quick chat.
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General information only. This doesn’t take your circumstances into account and isn’t tax, financial or legal advice. Talk to your accountant or registered tax agent before acting. PRM is not a registered tax agent; tax agent services are provided by Australian Tax & Super Pty Ltd (TPB 25291395).