Something you’ve forgotten?
The deadline to submit your QBCC Annual Report has come and gone. You may have already heard from QBCC reminding you of this deadline, or perhaps this blog has just reminded you. Either way, don’t panic!
This new annual reporting requirement only came into effect as of 1st January 2019, so this is the inaugural deadline for this new reporting requirement.
Why the change?
This new report is a part of changes aiming to ‘build a stronger, fairer construction industry’. It’s an opportunity for QBCC to check the ongoing financial health of license holders, whether an individual, partnership or company. All licensed trades businesses are required to operate with an appropriate level of working capital, determined by calculating your ratio of assets (things you have) to liabilities (things you owe). A summarised list of what defines an asset and what defines a liability can be found on the QBCC’s Guide to Annual Financial Reporting (pg. 9). For a comprehensive understanding, consult an accountant who specialises within the trades industry.
Is the annual report the same as the MFR?
When you first applied for your license, you proved that you had the minimum financial requirements (MFR), meaning you had sufficient working capital. The new annual report requirement does not replace the MFR check but rather ensures that you’re maintaining financial health each year.
What financial information do I need?
For licence categories 1 to 7, the QBCC requires you to submit a Profit and Loss Statement, Balance Sheet, Aged Debtors and Creditors listings and a Statement of Cash Flow.
Licence categories SC1 and SC2 only require profit and loss figures, revenue and expense figures and assets and liabilities. If your bookkeeping and accounting are up to date, your accounting software should be able to provide this organised information within a few clicks.
If you’re still stuffing receipts into a shoebox, you may find it a slight headache to organise. Remember that this report is now due as soon as possible, and an accountant can help you pull together an accurate report in a time-efficient manner.
Your ‘most recent reporting year’ for most licensees will align with the financial year, meaning you must include financial information up until 30 June 2019.
As of 2020, you may be eligible to nominate a different annual reporting due date. The QBCC will be in touch later in the year to provide information on applying for a new reporting date.
How you report depends on the licensee category you fall into, which is dependent on your total annual revenue:
- SC1 (Self-Certifying Category 1): annual turnover up to $200,000
- SC2 (Self-Certifying Category 2) : annual turnover between $200,000 to $800,000
- Categories 1-3: annual turnover between $800,000 and $30,000,000
- Categories 4-7: annual turnover over $30,000,000
So what if you fail this financial health check?
It’s not all doom and gloom. For licensees in categories from SC1 to Category 3, the QBCC will make contact with the licensee and talk through options available. It’s likely that you’ll be provided information, advice and resources for strengthening your finances, which will be reassessed in a year’s time. Your lower annual turnover means there is less risk tied to your business operations than licensees within the higher categories, meaning the QBCC will be more forgiving about a slip in compliance; however, each licence holder is reviewed on case-by-case basis and QBCC will use its discretion when assessing the licence holder’s lack of compliance.
For licensees in Categories 4 to 7, it is likely that the QBCC will follow up on non-compliant financial information and may result in a show-cause notice as to why the licence should not be suspended.
Don’t let the deadline sneak up on you again. Employ a trades-industry financial expert who will not only keep your financial reporting data up to date and accurate but also ensure that you adhere to all relevant QBCC and ATO deadlines.
Need help staying up to date? The Tradies Accountant team knows the industry and can assist in keeping your financial reporting up to date. Stop catching up and start keeping up – contact Bryn today.