Minimum Financial Requirements for licensees
The Minimum Financial Requirements (MFR) framework applies to contractor licensees in the building and construction industry and is regulated by the Queensland Building and Construction Commission (QBCC).
MFR amendment regulation 2024
Under the MFR framework, contractor licensees are required to report significant changes in circumstances, which may trigger the need for an MFR report so the QBCC can assess whether the licensee continues to have sufficient working capital and can cover their debts.
Other examples of when an MFR report may be required include increasing your maximum revenue or reporting a decrease in net tangible assets (NTA).
From 1 July 2021, the Australian Accounting Standards Board removed the ability for some for-profit entities, including contractor licensees in financial categories SC1, SC2, 1, 2 and 3, to prepare Special Purpose Financial Statements (SPFS) as part of their MFR reports.
As a result, all licensees were required to prepare General Purpose Financial Statements. This increased costs for category SC1, SC2, 1, 2 and 3 licensees.
The Queensland Government listened to industry concerns about these costs and has amended the MFR Regulation to reinstate the use of SPFS for those licensees.
Simpler requirements apply from 16 February 2024 for contractor licensees in financial categories SC1, SC2, 1, 2 and 3, with the QBCC again able to accept SPFS as part of an MFR report.
This change will also apply to an MFR report for the quarter ending 31 December 2023, and for licensees applying to change their financial category to one of the affected financial categories.
This will save affected licensees thousands of dollars in preparing MFR reports.
As part of the Queensland Government’s security of payment reforms, laws that strengthen the Minimum Financial Requirements (MFR) for licensing commenced from 1 January 2019.
Key changes to the new Minimum Financial Requirements Framework included:
1. Stronger reporting requirements
- Contractor licensees need to:
- provide financial information to the QBCC annually
- report significant decreases in Net Tangible Assets (20% for categories 4–7, 30% for other licensees).
- The threshold for self-certifying licensees increased from $600,000 to $800,000.
2. More clarity about what can be included when calculating a licensee’s assets and revenue
- Personal recreational and unregistered vehicles can no longer be used to meet minimum asset thresholds.
- Clarity about when money in Project Bank Accounts (or trust accounts under the new trust account framework) can be classified as an asset or revenue.
3. Improved data quality and availability for the QBCC
- The QBCC can now obtain independent verification of an MFR Report and to recover costs.
- Any ‘material changes’ made by an accountant to an MFR report need to be clearly identified and supported by updated financial information.
These laws benefit industry and the broader community by:
- providing greater transparency
- better equipping the QBCC to detect and mitigate the impact of potential insolvencies and corporate collapses
- helping to ensure licensees have sufficient working capital and their business model is financially sustainable.
The QBCC enforcement framework was also improved, including a range of new penalties and offences for licensees for failing to comply with the requirements.
- Last updated:
- 16 February 2024