Minimum Financial Requirements for licensees
As part of the Queensland Government’s security of payment reforms, new laws that strengthen the Minimum Financial Requirements (MFR) for licensing commenced from 1 January 2019.
The key changes in 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 has 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 now has the ability to 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 new 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 now also has an improved enforcement framework, including a range of new penalties and offences, for failing to comply with the requirements.
- Last updated:
- 13 July 2022