Article:

Navigating QBCC reporting changes for SC1 and SC2 licensees

11 November 2019

Shannon Rowe , Partner, Business Services |

What is a SC1 or SC2 Licence? 

SC1 and SC2 licences are “Self-Certifying” licences with low maximum revenue levels ($200,000 for SC1 and $800,000 (this was $600,000 until recently) for SC2) which allow the holder to undertake QBCC building work.

Although typically held by individuals, companies can also hold SC1/SC2 licences.

New reporting requirements

SC1 and SC2 licensees are caught up in the new QBCC reporting regime. The form “Minimum Financial Requirements Annual Reporting Form - SC1 and SC2 ” is required to be completed and lodged by SC1/SC2 licensees (regardless of whether the licensee trades in their own name or not) with the QBCC by 31 December to remain compliant.

There is significant risk here and consequent work to be done. The reporting rules require all assets and liabilities of a licensee to be included – not just business assets. Yes, this includes incorrect or misleading information that may lead to prosecution for an offence and/or review and possible cancellation of your licence, personal assets and liabilities that are not related to income producing activity.

It is also worthwhile pointing out the warning in section 8, which reads: incorrect or misleading information may lead to prosecution for an offence and/ or review and possible cancellation of your licence.

A refresher on the Minimum Financial Requirements for SC1/SC2 licensees:

  • Must not exceed their Maximum Revenue Limits (per above) – this is a financial year test
  • Must maintain Net Tangible Assets of at least $12k for SC1 and $46k for SC2
  • Must maintain a current ratio of at least 1:1 at all times – the current ratio is not mentioned in the Annual Reporting Form, however it is a requirement in the regulations.

The QBCC is focusing attention on the Maximum Revenue and Net Tangible Assets positions.

Important QBCC messaging

The QBCC has been providing specific messaging to SC1 & SC2 licensees:

  • For SC1 & SC2 licensees (and Category 1 to 3 licensees) who do not comply with the MFR Regulation, the QBCC will take an educative and facilitative approach, provided the licensee is responsive to reasonable requests from the QBCC and does not have unpaid debts to subcontractors or other serious breaches of the law.
  • The QBCC will contact licensees to offer assistance and guidance as to how they can meet the financial requirements.  For the 2019 annual reporting day, licensees will be given 12 months, until 31 December 2020, to strengthen their businesses and meet the Minimum Financial Requirements
  • It is important to lodge the financial information by 31 December 2019 even where you are concerned you do not meet the requirements
  • If you are experiencing hardship and need more time, contact the QBCC.

Nominee licence class 

There is a way out of the reporting for those who are not trading with their SC1/2 licence.

Where the licensee holds their SC1/ SC2 licence solely to act as the Nominee of a QBCC licensed company, only a Nominee Licence is required. Where only a Nominee Licence is held, the financial reporting obligations are not required.

Nominee licences are also cheaper to maintain. 

Please consider whether the SC1 or SC2 licence is the correct licence to hold for you and whether transferring to a Nominee Licence is the better alternative. 

Use the Change Licence Type form to affect the change.

Practical Considerations:

  • Do not let the existing SC1/SC2 licence lapse – ensure this is kept current and paid-up during the transition process
  • The QBCC normally allows 21 Business Days to process the change of licence type. With the current reporting changes creating an increased workload at their end, the current timeframe will be longer. We recommend to start this process ASAP and get as close to the front of the queue as you are able
  • The cost is $213.75 for the application
  • As the SC1/SC2 licensees are more expensive than a Nominee Supervisor Licence, a refund (not an offset to the application fee) can be requested on a pro-rata basis. The QBCC will assess and have discretion. Request the refund in writing when submitting the Application Form and provide bank account details to make their decision as easy as possible.

Licence holders can search for their licence class here: QBCC Licence Search page

For assistance or more information on the recent QBCC reporting changes, please contact BDO’s QBCC specialist Shannon Rowe. Further insights on the QBCC reporting changes are also available here

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