The QBCC (Queensland Building and Construction Commission) has recently updated their accounting regulations for QBCC licensees when changing their maximum turnover limits.
The changes to their regulations are designed to tighten the rules around the accounting records that can be provided to the QBCC via Minimum Financial Requirements (MFR) Reports.
In short, the changes require the licensee to adopt all applicable Australian Accounting Standards when lodging the MFR Reports.
We’re here to walk you through everything you need to know about the changes, how to navigate them, and what they mean for your specific licensee category.
QC Accountants is based on Australia’s sunny Gold Coast in southeast Queensland. The company was founded in 2013 with a desire to help businesses transform into the thriving companies they have always dreamed of becoming. We can:
- We prepare general purpose financial reports for other licensees;
- We prepare and lodge the MFR;
- We can help you to make sure that you have enough assets in your business.
Contact us and let’s start growing your business today.
The Recent QBCC Reporting Changes
The overall takeaway from the change is that Special Purpose Financial Statements (SPFS) are no longer accepted by the QBCC when lodging an MFR Report from 1 July 2022, instead requiring General Purpose Financial Statements (GPFS) to be prepared.
Fortunately, you are only required to use General Purpose Financial Reports when changing your maximum revenue limit. The different categories are listed below:
- SC1: Max net tangible assets (NTA) of $12,000, maximum revenue of $200,000
- SC2: Max NTA $46,000, Maximum revenue $800,000
- Category 1: Max NTA $156,000, Maximum revenue $3,000,000
- Category 2: Max NTA $480,000, Maximum revenue $12,00,000
- Category 3: Max NTA $1,200,000, Maximum revenue $30,000,000
- Category 4: Max NTA $2,400,000, Maximum revenue $60,000,000
- Category 5: Max NTA $4,800,000, Maximum revenue $120,000,000
- Category 6: Max NTA $14,400,000, Maximum revenue $240,000,000
- Category 7: Max NTA >$14,400,000, Maximum revenue >$240,000,000
An example of this may be changing from Self Certifying Category 2 (SC2) ($800k limit) to Category 1 ($3m limit). There is no requirement at the time of this blog to use General Purpose Financial Reports when lodging your annual return to QBCC.
Understanding QBCC Net Tangible Assets
The QBCC defines your net tangible assets (NTA) as the total assets of your business less any intangible assets. Before looking at the formula, let’s look at a few definitions:
Allowable assets (tangible assets) are things such as real estate, cash, plant and equipment, and tools of the trade.
Disallowed assets include a wide range of things such as:
- A recreational vehicle
- An unregistered vehicle
- A racehorse
- A collector’s item
- Contingent assets (aasb 137)
- Personal furniture
- Unlisted investments or shares
- Non-monetary credits (including cryptocurrency, bartercard etc)
- Investments valued using the equity method under aasb 128 for special purpose financial statements
- And many more
Intangible assets include things such as:
- Goodwill
- Right of indemnity
- Intellectual property
- Formation expenses
- Value of trademark
- Patents
- Borrowing expenses
- Deferred tax assets.
From these, your NTA is then calculated using the following formula:
NTA = [assets] – [liabilities] – [intangible assets] – [disallowed assets]
Your NTA is what the QBCC uses to determine which financial category you fall into, and in turn what your maximum allowable revenue is.
A Quick Look at GPFS: General Purpose Financial Statements
General purpose financial statements(GPFS), are financial reports that are normally only prepared by bigger businesses such as large public companies.
Your GPFS should relay information regarding your business’s financial performance and position, giving details about your company’s:
- Assets
- Liabilities
- Equity
- Income and expenses, including gains and losses
- Contributions by and distributions to owners in their capacity as owners
- Cash flows
To submit a GPFS, you must submit the approved form in PDF format online to the ATO, they do not accept paper or email submissions. If you are unsure of how to submit a GPFS and the needs applicable to you, please contact us today and we can ensure that you are compliant with all the new QBCC regulations.
QBCC Changes: What Should You Do Next?
The next step you should take to prepare for the new changes from the QBCC is to speak to your accountant. It’s possible that if they’re not a specialist in industries impacted by this change, they may not have the experience or capability to help prepare a GPFS, in which case you should contact us today.
We understand the stringent demands placed on you by the QBCC and other industry players. Changing market conditions and cash flow management issues create challenges for industry professionals, particularly with rising costs and the limited availability of materials. We can customise a tailored package to suit your building and construction accounting needs.
Get Help with Your GPFS and MFR Reports with QC Accountants
At QC Accountants, we offer a full range of services relating to QBCC reporting — including preparing general purpose financial reports for licensees, preparing and lodging the MFR, and helping you ensure that you have the necessary assets for your business.
For many of the businesses we work with, having a dedicated team to assist with accounting and taxation gives them peace of mind. More importantly, it gives them the ability to make informed financial decisions that will allow them to nurture their businesses – both today and into the future.
So contact us today, and let us take care of the hard work for you.
As a holder of an AFSL, there are certain financial reporting requirements you must meet, including solvency, net tangible asset, and cash needs requirements, as outlined in the RG166. In this article, we look at these requirements and how to lodge your general purpose financial statement (GPFS), FS70, and FS71, in order to ensure AFSL compliance.
QC Accountants is based on Australia’s sunny Gold Coast in southeast Queensland. The company was founded in 2013 with a desire to help businesses transform into the thriving companies they have always dreamed of becoming. We can:
- Prepare general purpose financial reports for other licensees;
- Liaise with your auditors;
- Assist with preparing cashflow forecast reports;
- Report to your Board of Directors to ensure you continue to meet your RG166 (regulatory capital requirements).
Contact us and let’s start growing your business today.
AFSL net tangible assets requirements
According to ASIC and as outlined in the RG166, the solvency and positive net assets requirement is outlined as follows:
RG 166.32 The Corporations Act requires directors of a company to prevent insolvent trading by the company: see Div 3 of Pt 5.7B. It is not appropriate for any AFS licensee, including a natural person, to carry on a financial services business while insolvent.
RG 166.33 It is also not appropriate that you carry on a financial services business with liabilities exceeding your assets. AFS licensees that trade when insolvent or while having negative net assets are unlikely to have the resources to carry on the financial services business in compliance with the licensee obligations under Ch 7 of the Corporations Act.
RG 166.34 You should continuously monitor your solvency, but we do not require you to continuously monitor your net assets position. However, you must review it if you have some reason to doubt you have adequate net assets.
Essentially this means that in order to continue trading, you have the responsibility of being solvent as well as having positive net tangible assets. You must regularly ensure that you are solvent, and you must perform a review of your net assets if you have any suspicion that they aren’t where they need to be.
AFSL cash needs requirement
The cash needs requirement as outlined in the RG166 states:
RG 166.35 As a condition of your AFS licence, you must have sufficient resources to meet your anticipated cash flow expenses (cash needs requirement).
Essentially this means that you need to have sufficient outgoings to cover operation of your business for a certain period of time, in order to manage any contingencies. There are 5 total cash needs options outlined in the RG166, with each having different requirements. The options are outlined as follows:
| Option | Description |
See RG 166.40–RG 166.44 |
Option 1 is designed for licensees that maintain a certain level of cash or other liquid financial resources at all times (e.g. by way of commitments by a parent company). We expect this option will be relevant for some small business licensees. |
See RG 166.45–RG 166.47 |
Option 2 is suitable for all kinds of licensees, including small business licensees that do not always maintain cash or commitments of support from others. We expect this option will be most relevant for small business licensees. |
See RG 166.50 |
Option 3 is relevant to licensees that can draw on financial backing from an Australian ADI or a relevantly recognised foreign regulated deposit-taking institution. We expect this option will not be relevant for small business licensees: see Table 6 and Information release (IR 03-26) Alternative means to satisfy cash needs requirement under PS 166. |
See RG 166.51 |
Option 4 is relevant to subsidiaries of certain prudentially regulated bodies. We expect this option will not be relevant for small business licensees: see Table 6 and IR 03-26. |
See RG 166.52 |
Option 5 is relevant to licensees in corporate groups that plan cash flows on a group basis. We expect this option will not be relevant for small business licensees: see Table 6 and Information release (IR 03-44) ASIC provides further options to meet cash needs requirements. There are alternatives under Option 5: Option 5A (suitable for a licensee with a commitment from a parent) and Option 5B (suitable for a licensee without a commitment from a related body corporate). |
At QC Accountants, we can report directly to your board of directors in order to verify that you meet the net tangible asset requirement and the cash needs requirement for your business, as well as work with your auditor after the fact. Contact us today and we will take care of it for you, no matter which option you are subject to.
Submitting general purpose financial settlements (GPFS)
On Friday, June 3 2022 an ASIC media release outlined financial reporting changes for AFS licensees.
These changes state that any for-profit company, registered scheme or disclosing entity that submits financial reports under Chapter 2M of the Corporations Act 2001 that are not themselves reporting entities can no longer prepare special purpose financial reports (SPFRs). They must now submit general purpose financial statements (GPFS).
This allows entities that do not have public accountability to use a simplified disclosure regime (Tier 2 simplified disclosures). Entities that do have public accountability however must comply with the disclosure requirements of the full standard (Tier 1 general purpose financial statements). An entity with public accountability is defined as:
- An entity whose debt or equity instruments are traded in a public market, or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or
- An entity that holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (this would include AFS licensees that hold client monies).
The GPFS must be lodged online as a PDF with the ATO on or before the day that you lodge your income tax return. On top of a GPFS, you must also lodge an FS70.
Lodging an FS70 / FS71 / FS76
The form FS70 is the Australian financial services licensee profit and loss statement and balance sheet and must be lodged every year. When lodging the form FS70 you must also attach a copy of your complete financial statements, including a profit and loss statement, balance sheet, non disclosures, and an audit report. On top of this, you must also lodge a form FS71, also known as an Auditor’s report. The FS71 is essentially a review of your FS70 performed by an auditor. This form is completed by an independent auditor but must be lodged by you, the AFS licensee.
If you are a limited AFS licensee and do not deal with client money, you must lodge a Form FS70 and a Form FS76 Annual compliance certificate but not a form FS71 unless you were not a limited licensee for part of the year, in which case you must submit all three.
We can help you lodge your form FS70 and/or FS76 as well as work with your auditor in order to lodge the form FS71 on time and according to regulation, just contact us to discuss your situation. You can also find out more information on forms FS70, FS76, and FS71 on ASIC’s website.
QC Accountants can help you with AFSL compliance
AFSL compliance requirements change frequently. ASIC’s financial requirements are tightening every year and it can be difficult to ensure compliance on an ongoing basis. We can assist organisations that hold AFSLs to meet compliance requirements, including all of those detailed in this article.
If you or your business want further advice and help in regards to any AFSL compliance issues, contact us today.
When it comes to preparing your business to hit the ground running in the new year, the best thing you can do is speak to your accountant. They know the ins and outs of how to properly prepare your business for the new year, whether you close for the holiday period, or if this is your busiest time of the year. However, there are a few things you can do to get ahead of the curve for 2022, including reviewing business processes, technology, spending habits and trends.
Review your business processes and tech
The new year is often regarded as the time to reflect and make new resolutions. As a business owner, one of your top priorities should be to take a close, honest look at the way you operate your business, where the bulk of your income comes from, where it goes, and how you can implement better spending habits and bolster income streams.
The technology you use is another factor to consider. Consider your payroll, bookkeeping, superannuation, record keeping, etc. The software available for keeping track of these aspects of business have evolved exponentially over the years, helping you to save time, money and even the environment through the use of digital and cloud-based platforms.
Assess your income and spending
Reviewing your current income streams and business expenses is key to identifying areas that need to be better managed and improved. Gathering and assessing this data can also allow you to identify both positive and negative trends, and develop ways to enhance what is working, whilst reducing unproductive spending.
Looking back often allows us to make predictions for the future, and enables businesses to make educated decisions when it comes to planning for the year ahead.
Update your business plan
A business plan should never be set in stone and the new year is a good time to review what did and did not work for your business, what other businesses are doing well, and how you can promote growth and prosperity. By keeping your business plan flexible enough to make changes as the business environment shifts, you are much better placed to weather most issues with relative ease.
Collaborate with your business accountant to make the most of their expertise when it comes to financial data analysis, predictions and planning. By employing the knowledge of a financial advisor, you become free to focus on the operations of the business plan. You can also rest easy knowing that your business is being guided by an industry professional with the experience and skills necessary to help your business thrive.
You don’t need to reinvent the wheel to get your business heading in the right direction in the new year. Follow these simple steps and you will find yourself well equipped to take on what 2022 has in store, or get in touch with the friendly team at QCA for the best, tailored advice to really kick start your new year!
If you are an employer, your superannuation is a huge part of the payroll process. Superannuation payments are often overlooked when cash flow gets tight or when internal processes aren’t in place to handle it. Super needs to be paid on time, every month. If not paid on time, you run the risk of encountering any or all of the four major consequences outlined below.
1. You will not receive income tax deductions
Superannuation is one of the easiest ways to save on tax. If superannuation is only one day overdue, it can no longer be claimed as a tax deduction. This means you’re paying more tax if it’s not paid on time.
If you don’t meet your legal obligation of paying superannuation on time then there could be tax implications which means you could end up paying up to 25% more. This can add up and become a potentially catastrophic burden on your business.
Income tax deductions often translate into tens of thousands of dollars for medium sized businesses, either spent or saved depending on whether or not you pay on time.
2. You are obligated to notify the ATO
In the event that your superannuation payments are late, you are responsible for filing a Superannuation Guarantee Charge Form (SGC) within 1 month of the payment due date.
The SGC is designed to give the ATO a detailed account of late payments, including relevant information such as the financial quarter, due date, due payment, employee, etc. This form can also include details of the payment if it is made between the due date and the date the form is submitted.
3. Extra Fees
When lodging an SGC form, it is your obligation as an employer to provide compensation for late payments. This process provides disincentives for late payments, as well as compensating employees for time their superannuation was not being invested.
Generally, the interest rate paid on late super payments is 10%, as well as a $20 fee per employee paid to the ATO per quarter of late payments. These fees and interest payments can quickly add up and failure to comply can result in personal liability and serious repercussions.
4. Personal liability
Failure to comply with the legal obligations you have as an employer when it comes to superannuation is a serious infraction in the eyes of the ATO, putting you in a bad position if your business practices are not up to scratch.
Director penalty notices are a legally binding responsibility, naming company directors and trustees personally liable for the superannuation owed to employees if payments are late or SGC forms are not lodged in time.
If your business is at the stage of receiving director penalty notices from the ATO, there are some very serious issues that need to be addressed. These notices are a major sign of malcompliance, and failure to acknowledge and respond appropriately to these notices is an invitation for the ATO to come down on your business with force.
Conclusion
When it comes to superannuation, it pays to have good business practices in place, and a thorough understanding of your obligations as an employer. Knowing what happens if you don’t pay super to your employees on time is a good place to start.
Inability to keep up with your superannuation obligations is a slippery path that can quickly lead your business into unfavourable territory. If you’re having trouble keeping up with superannuation payments, now is the time to have a look at your business practices. The team at QC Accountants are superannuation experts who are here to help your business thrive. Get in touch for help and advice towards getting your superannuation payments on track.
The Australian Government has been helpful in the Covid19 crises, and so far announced multiple packages on how to help SME businesses.
One of them is an instant $150k Asset Write Off which came into effect in March and has been extended until 31st December 2020.
What is an instant asset write off?
According to the ATO, an instant asset write off is an immediate write off of each asset that costs less than the threshold. Businesses can now claim a tax deduction for the business portion of the purchase cost in the year the asset is first used or installed ready for use.
How does it work?
If your business’ annual turnover is less than $500 million, you are eligible to claim immediate deductions up to an amount of $150,000 for any new or second-hand plant and equipment assets purchases. That means you can purchase any equipment, any vehicle or material for your company that will help you to recover from the current situation or improve your business in the future. Don’t forget if you wish to claim an immediate portion from your purchased asset this is only allowed in the year the asset is first used or installed ready for use.
A humble note, is that if you are planning on purchasing a motor vehicle, the depreciation limit is $59,136, cars over this value are deemed by the ATO to be a luxury vehicle.
Is my business eligible?
Before you make any new purchases, we would suggest checking out assets that are excluded from the government lists such as horticultural plants or simply contact us and we can assist you.
Remember we don’t charge for quick 5 minute phone calls and we encourage all of our clients to take advantage of this.
It’s important to always align your strategy with your established business plan.
How do I apply for the instant asset write-off?
Here at QC Accountants, we are ready to help you with additional details and also help you to claim the business portion of the asset’s use in your tax return for the particular financial year.
If you have any questions at all, do not hesitate to contact our team of professionals on 07 5593 6060 as we are here to help you.
The start of the financial year is a great time to review and understand the requirements of record-keeping for business. If you can stay on top of your record-keeping throughout the year, you’ll have less of a headache come tax time next year. Not only that, but sound record-keeping in your business will enable better cash flow management.
Let’s take a look at best practices of record-keeping for business, and how you can stay on track throughout the year.
Which Records do I Need to Keep?
Records are required wherever there’s activity relating to:
- Starting your business
- Running your business
- Changing your business
- Selling/ Closing a business
Records that relate to both business and personal use need to show which portion is relevant to the business.
Keep records that relate to your business income and expenses. You should also keep records of estimates/ methods/ calculations of your business’ tax and super affairs.
Make record-keeping a part of your daily business operations to stay organised and within legal requirements.
How to Keep Records
As a general rule, you need to keep records for 5 years from when you prepared/ obtained the record, or completed the transactions/ actions related to the record – whichever is later. There are some exceptions to this rule in individual circumstances.
It is acceptable to store records digitally, provided they are held within an encryption system, password-protected and indexed or labelled in an easily accessible way. They must be in English or easily converted to English. The ATO recommends keeping records digitally.
Bear in mind that the ATO may need to access your records, so it’s important to file and manage them in a way that the information can be easily extracted and reviewed.
How QC Accountants can Help
As a business, you can keep your records, but working with a registered tax or BAS agent may be a viable option for you, in terms of collecting, filing, and managing your records.
QC Accountants can help by collecting and managing your records. If we also conduct your tax return it can be beneficial and time-saving if we’ve been managing your records. In any case, you should regularly verify that you’re meeting your record-keeping obligations.
The ATO has a handy record-keeping evaluation tool online for businesses.
If you’d like to discuss our capabilities for managing your records, please get in touch. We’d love to hear from you.
The Annual Reporting requirement is part of the new reporting requirements that the QBCC introduced in the 1 April 2019 legalisation changes.
The Annual Report
The Annual Report asks each licensee to provide the QBCC with Financial Information (essential profit & loss and balance sheet information) from the most recent financial year – for most licensees this will be the prior 30 June.
The amount of information that you need to provide will depend on which type of license you hold:
- Self-disclosing category 1 – turnover up to $200,000
- Self-disclosing category 2 – turnover up to $870,000
- Category 1 – turnover up to $3,000,000
- Category 2 – turnover up to $12,000,000
- Category 3 – turnover up to $30,000,000
How to lodge
Self-disclosing categories 1 & 2
We have spoken with the QBCC, they have confirmed that the Financials can be directly from your accounting software. We encourage you to be cautious as they must still meet the minimum financial requirements under your license.
Categories 1,2 & 3
If your license is under these categories, it is likely that you will require our assistance to prepare the Financial Information as you must lodge A Statement of Cash Flow & Statement of Equity which are generally unavailable directly from your Accounting software.
Annual Reporting versus Minimum Financial Requirements
At a basic level the Annual Reporting will provide the QBCC with access to your revenue, expenses, assets and liabilities which will allow the QBCC to determine if you hold more enough Net Tangible Assets at the end of the financial year.
This will also allow the QBCC to focus on licensees who do not hold enough to match their turnover, providing them with a grace period of up to 31 December 2020 to strengthen up their asset position.
We will send more information about this in the next few months.
How we can help
We recommend that you allow us to assist with lodging your Annual Report, this is easily done by adding your Accountant as a nominated representative under myQBCC:
Add a nominated representative:
- Select “My Licences” at the top of account login page
- Click “Action” tab to the left of the licence you are granting access to
- Select “Add a new representative”
- Enter the representative details:
- Chris Henman – 0404 935 495
- Dean Coram – 0421 866 831
[email protected] [email protected]
- Click submit to access the Manage Permissions page
- Locate the newly added representative and click ‘enable’ to grant permission to access myQBCC
Or by calling QBCC directly on 139 333.
We are always here to help if you have any more questions on your QBCC reporting requirements, please feel free to call your Accounting team on 07 5593 6060.
Our clients come to us looking for experienced and passionate Gold Coast accountants who offer a full range of accounting and tax services that suit their business. We can help you demystify your tax and accounting and, ultimately, take your business to the next level. We give you the confidence to make strategic business decisions that will help your business thrive.
