The Queensland Building and Construction Commission (QBCC) recently announced that the framework for the Minimum Financial Requirement (MFR) would change for the quarter ending 31 December 2023 onwards. This change affects contractor licensees in the building and construction industry, with the aim to streamline the process for the contractors to provide their financial statements.
Why the MFR framework is used
Under the MFR framework, contractor licensees are required to report significant changes in circumstances relating to their work. This may trigger the need for an MFR report so the QBCC can assess whether the licensee has sufficient working capital and can cover their debts.
Other reasons why an MFR report is used include:
- When a new contractor-type license has been applied for.
- Increases in maximum revenue within the contractor’s financial category.
- A reported decrease in net tangible assets.
- Significant changes to the business structure or ownership.
- Change or withdrawal of a covenantor.
- Requested by the QBCC.
Background on the changes to the MFR
These changes follow amendments made by the Australian Accounting Standards Board on 1 July 2021. The amendments made by the board included removing the ability for some for-profit entities, including contractor licensees in certain financial categories, to prepare Special Purpose Financial Statements (SPFS) as part of their MFR report. As a result of these changes, all licensees were required to prepare General Purpose Financial Statements. This saw an increase in costs for a number of the financial categories within the industry.
The regulation has now been reinstated with SPFS again accepted as part of the MFR report, which makes the requirements simpler and cheaper for licensees in the financial categories of SC1, SC2, 1, 2, and 3.
Which contractor licensees are impacted by this change?
If you are within the following categories, you will be required to prepare SPFS as part of your MFR report, instead of the detailed GPFS, from the quarter ending 31 December 2023.
The financial categories impacted by the MFR regulation changes are:
- SC1 – Contractor revenue no more than $200,000
- SC2 – Contractor revenue between $200,001 and $800,000
- Cat 1 – Contractor revenue between $800,001 and $3M
- Cat 2 – Contractor revenue between $3,000,001 and $12M
- Cat 3 – Contractor revenue between $12,000,001 and $30M
According to the Queensland Government Department of Energy and Climate, this change to the MFR framework will save thousands of dollars in preparing these reports. Also making it easier for contractors to complete their financial statements.
How Nexis can assist in your MFR reporting
At Nexis, we can assist in providing advice on your MFR reporting to help sustain your QBCC license. We can also prepare and lodge financial reports on your behalf while complying with the Australian Accounting Standards.
Get in touch today to start the MFR reporting process.
