Navigating the Queensland Building & Construction Commission Minimum Financial Requirements

Queensland Building & Construction

Businesses are now feeling the impact of changes to the Minimum Financial Requirements (MFR) implemented by the Queensland Building and Construction Commission (QBCC) over the past 12 months.

The MFR require QBCC licensees who hold a contractor licence to meet annual reporting obligations. However, licensees who hold a nominee supervisor or site supervisor licence are not required to meet the MFR.

The changes were implemented in two stages. Stage 1 commenced on 1 January 2019 and reintroduced the mandatory reporting requirements for all contractor licensees. Stage 2 commenced on 2 April 2019 and introduced increased reporting standards for Categories 4-7 licensees together with other reforms.

Licensees holding a contracting license were required to lodge their financial information by 31 December 2019. Failure to meet the QBCC reporting requirements could result in suspension of building licenses and significant fines.

The information provided to the QBCC must be prepared by a qualified accountant and meet the MFR Guidelines. The licensees’ net tangible assets need to be sufficient to support forecasted revenue and calculations cannot rely on certain ‘disallowed assets’. Disallowed assets presently include:

  • recreational vehicles
  • unregistered vehicles
  • racehorses
  • collectors’ items
  • furniture predominantly used for personal purposes
  • units in a trust not listed on a stock exchange
  • superannuation benefits that cannot be accessed by the license on the day the disallowed assets are worked out
  • life or income protection policy benefits
  • contingent assets
  • investments in, or shares of, a company not listed on a stock exchange
  • investments valued using the equity method for a special financial purpose financial statement
  • non-monetary credits
  • assets held on trust by the licensee for a beneficiary other than the licensee
  • an amount owing to the licensee if an invoice for the amount was issued more than 1 year before the day the disallowed assets are worked out
  • a deed of covenant asset for which the licensee is the covenantor

The QBCC will be monitoring net tangible assets ratios to ensure they meet the applicable licence category requirements. If a licensee provides a MFR report and does not have the net tangible assets to meet the defined amount required, they can make up the defined amount by a third party providing a Deed of Covenant and Assurance (the Covenant) to pay the defined amount if an insolvency event occurs.

The Covenant is a guarantee of the licensees’ debts if required by the QBCC. By providing a Covenant, a covenantor also charges their interest in any property they hold to secure payment of the defined amount. If an insolvency event occurs, the QBCC call in the Covenant and can take steps to sell that property to meet the charge.

The covenantor is required to obtain financial advice to produce the required financial documentation to support an application to the QBCC and then attend a lawyer for legal advice about the risks and obligations associated with being a covenantor to a contractor licensed by the QBCC.

It is important for covenantors to understand that the defined amount is not fixed and can change annually depending on the amount of turnover and the net tangible assets of the licensee.

The Covenant remains in force until extinguished by the QBCC.  A Covenant can be released if the licensor satisfies the MFR in a way that does not require reliance on the Covenant and the QBCC gives notice to the parties that this is the case, or if a further covenant is entered into by the parties.

A Covenant can only be revoked in writing by the QBCC. A covenantor should get legal advice to ensure that the QBCC properly revokes any Covenant where it is no longer required to be relied upon.

However, even when revoked, the Covenant will still apply to any obligation to pay the defined amount which might have arisen during the period the Covenant applied and which later becomes payable.


  • If your business holds a QBCC contractor license make sure a MFR report has been lodged with the QBCC. If not, take steps to lodge a report without delay.
  • If you do not meet the MFR, consider whether a Covenant is a suitable alternative.
  • If you are a licensee or a covenantor, obtain appropriate financial and legal advice before entering into any arrangements.
  • Remember, Covenants may be easily forgotten if they are not reviewed regularly to determine if they are still required.
  • If circumstances change, obtain legal advice to ensure the Covenant is properly revoked.

If you require any advice about the QBCC’s MFR or Covenants, please contact Murdoch Lawyers Director Matt Bell on 1300 068 736.

This publication has been carefully prepared, but it has been written in general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.

    Contact Information

    Direct Line: 1300 068 736