Minimum financial requirements, MFR, are part of obtaining and maintaining a contractor-type licence. Check the financial requirements alongside the class and business structure before lodging an application or expanding the business.
What MFR checks
QBCC’s MFR overview sets baseline requirements for liquidity, assets and working capital. These include a current ratio of at least 1:1 and sufficient net tangible assets for the approved revenue.
Net tangible assets, NTA, are assets less intangible assets and all liabilities. Goodwill, for example, is not a tangible asset. Related-entity loans cannot simply be ignored as liabilities. Your accountant should apply QBCC’s rules to the actual accounts.
A general baseline of non-negative NTA does not replace the higher asset requirement for the revenue you seek.
Maximum revenue is the business’s limit
QBCC uses the business’s financial position to determine maximum revenue. The calculation can include eligible amounts supported by a deed of covenant where permitted.
Revenue includes income from building work and other sources in Queensland, interstate and overseas. Personal wages and salary received by the licensee are excluded. For a partnership or trustee, the relevant combined revenue must be considered.
An increase of more than 10 per cent above the approved maximum revenue in a financial year needs prior QBCC approval. Check the required declaration or MFR report before committing to work that would exceed the limit.
A starting point for smaller contractor businesses
The current QBCC table includes these starting categories:
| Financial category | Maximum revenue range | Required net tangible assets |
|---|---|---|
| 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 |
These are category ranges, not permission to earn the top figure automatically. QBCC must set the business’s actual maximum revenue. Use the live maximum revenue table and calculator with your accountant for larger categories or a proposed increase.
SC1 and SC2 cannot rely on a deed of covenant to meet their NTA requirement. Different rules apply to higher categories.
Reporting exemptions do not always remove MFR
Individual licensees in SC1 and SC2 are exempt from annual financial reporting, but must still comply with their other MFR obligations. Companies in those categories still have annual reporting requirements.
Nominee supervisor, site supervisor and occupational licensees do not have MFR obligations. There are also limited exemptions for contractors holding only specified professional classes with current professional indemnity insurance. Do not apply that exemption to a building or trade contractor merely because they hold an insurance policy.
Confirm your position on QBCC’s financial reporting obligations page.
Prepare for the accountant conversation
Bring:
- the entity and licence type being applied for
- the revenue the business expects to earn
- current accounts and details of assets, liabilities and related entities
- any existing approved maximum revenue
- proposed changes to turnover or business structure.
Ask which declaration, report or financial statements QBCC requires for this application. Keep the financial figures consistent with the entity named on the licence forms.
Keep application support and financial advice separate
Builders Licence Success helps identify and organise the licence application requirements. Your accountant advises on the accounts and financial evidence, and QBCC administers MFR and decides the licence application. If the business may be insolvent, seek appropriate financial and legal advice promptly.
Preparing a contractor application? Start the next-step check. BLS can check the licence and entity before you arrange the required financial material with your accountant.