Depreciation and Regulatory Compliance:
Common Questions for Australian Businesses

The QBCC sets minimum financial requirements for licensed builders and contractors, based on net tangible assets. Fixed assets are tangible assets, but only if they are properly carried on the balance sheet. If your plant and equipment has been written off for tax and is not maintained on your accounting records at its accounting value, your NTA will be understated. For builders operating close to a licence threshold, this can turn a compliance position into a reportable breach. For accountants The QBCC Minimum Financial Requirements Policy defines NTA for the purposes of the MFR assessment. Licensees must submit annual financial information confirming compliance. The figures used must come from financial statements prepared in accordance with applicable accounting standards. Statements based on tax depreciation do not satisfy this requirement.

Three things: 1. Are your fixed assets carried on the balance sheet at accounting value rather than tax value? 2. Is the NTA calculated from those figures above the threshold for your licence category? 3. If any significant asset disposals have occurred during the year, has the NTA impact been assessed before the return is lodged? These checks should happen before the financial statements are finalised, not after. For accountants QBCC annual reporting uses financial statements that must be prepared in accordance with applicable accounting standards. Category 1 to 3 licensees require a compilation report from a qualified accountant. Category 4 and above require a review or audit. The accountant preparing the compilation or review has an obligation to ensure the statements are presented fairly, which includes ensuring depreciation is correctly treated.

Yes. NTA-based financial requirements appear in a range of Australian licensing and registration regimes beyond QBCC: • NSW, Victorian, and South Australian building contractor registration schemes; • ASIC's Australian Financial Services Licence (AFSL) requirements; • Australian Credit Licence (ACL) requirements under the National Consumer Credit Protection Act; • and NDIS provider registration at higher registration groups. In each case, the principle is the same; the regulatory body uses NTA as a proxy for financial capacity and stability. For accountants Each regime uses its own definition of NTA and its own methodology for calculating compliance. Advisors working across multiple regulated industries should not assume that a passing NTA position under one regime satisfies the requirements of another. The specific regulatory definition must be applied in each case.