Upcoming QBCC Changes
Read about the newest changes to the QBCC’s minimum reporting requirements, and get in touch with Marsh Tincknell before taking any action.
What are the changes & what do they mean?
Due to some high profile collapses and insolvencies in the local construction industry, the QBCC is looking to change the minimum reporting requirements.
What are the changes aiming to do?
- Strengthen reporting requirements;
- Provide clarity about what can be included with calculating a licensee’s revenue and assets; and
- Develop data quality and availability for QBCC.
What do the changes mean for me?
All those who hold a QBCC license will be affected in different ways. This will depend on the category of your license.
Firstly, all those who hold a license will need to report their financial information to the QBCC every year. This was a requirement up until 2014 and has recently been brought back into place.
If you currently provide annual reporting to the QBCC, the process will be kept the same as much as possible.
Changes for Categories SC1 & SC2 (up to and including $600k Revenue)
You will need to be able to self-certify that you are meeting the appropriate requirements.
You will need to be able to report the current ratio of assets, to your liabilities. The QBCC is planning on releasing an online reporting tool that will help with this. But you can always contact your Accountant as Marsh Tincknell for assistance on this calculation.
Changes for SC1 to Category 3 (those with a turnover of up to $30 Million)
Those who fall into this category will be still be required to report any decreases in Net Tangible Assets of 30% or more.
Changes for Categories 4 – 7 (those with a turnover of more than $30M)
Anyone falling into this
You will also need to use a “Balanced Scorecard” – which essentially requires you to report on more detailed information to the QBCC. This will allow QBCC to better detect potential insolvencies earlier on in the piece.
Changes to how you calculate assets and revenue
Unfortunately, personal recreational vehicles won’t be able to be included in the minimum asset thresholds. This means you cannot use things like golf carts and dirt bikes to increase the value of the assets that the business has.
There will be more clarification for whether the money held in a project bank account can be included as a licensee’s asset or revenue:
– The head contractor and subcontractors will be able to include amounts in the general trust account that they have a beneficial interest in, as an asset.
– Subcontractors involved will also be able to include the retention amounts and any possible disputed funds that relate to them as assets.
Changes to data availability and quality
The QBCC also wants better data and quality of that data, so that they can enforce better control.
They will be able to seek advice from an independent qualified Accountant to substantiate information you provide them
If the information you provide the QBCC is deemed to be incorrect, then you may be liable to pay for the costs of the independent assessment that was required to deem this.
If the licensee relies on a deed of covenant, then the QBCC will need to be provided with detailed financial information regarding the covenantor.
When it comes to related entity loans, the QBCC
When will these changes be implemented?
The first phase of reforms
have already commenced on the 1st of January this year (2019). This includes:
– Re-introducing annual reporting requirements.
– Larger licensees are required to report decreases in net tangible assets which are larger than 20%, and;
– The aforementioned changes regarding the inclusion of personal/recreational vehicles in Assets, as well as when to include project bank account funds in assets (see above changes to calculating assets and revenue).
Phase two will include all of the remaining reforms in relation to the standard of reporting. While this date is not set in stone, it is likely to be on the 1st of April, 2019. But as always, we recommend speaking to your advisor at Marsh Tincknell before responding to the QBCC regarding these changes. We want to make sure that you get the best possible outcome as a result of the changes.
What will happen if you don’t adhere to these new changes? What’s the penalty?
The penalties for failing to comply with these changes will come into play immediately after the changes are introduced. The QBCC is able to cancel or suspend building licenses. They can also provide penalties for providing false information, or refusing to supply information at their request.
The second phase of changes (looking at April 2019) are aimed at stronger, and more strict enforcement. This will include possibly imposing executive office liabilities and increasing penalties.
Call your advisor at Marsh Tincknell today to be confident with these upcoming changes
Get In Touch!