QBCC Headroom Check

How the check works

The current ratio. At each point, current assets are today's current assets, plus the supplier credit, overdraft and client deposits carrying the job, plus the job's gross profit, less plant paid in cash and less retention your client will hold beyond 12 months. Current liabilities are today's, plus that same credit, overdraft and deposits, plus plant on short term finance or the next 12 months of long term repayments, plus tax on the gross profit. The ratio is current assets over current liabilities, cut to two decimals and never rounded up, and it passes at 1 to 1 or better.

Net tangible assets. Today's net tangible assets, plus the gross profit, less its tax. Plant is a tangible asset, so buying it with cash or finance leaves them unchanged. They are compared with the minimum for the maximum revenue the year needs: your approved maximum, or the revenue with the job when that is higher, using the formula in schedule 1, part 2 of the MFR Regulation.

The formula. Gross profit equals the amount billed times the margin; tax equals gross profit times your tax rate; headroom equals current assets less current liabilities, which is how much more cash could go out, or new current debt come in, before the ratio falls below 1 to 1.

Worked example

Illustrative, built from public rules and typical figures for a builder, and checked in code on 21 October 2026.

A Category 2 builder has current assets of $1,150,000 and current liabilities of $1,000,000, a current ratio of 1.15 with $150,000 of headroom. Its net tangible assets are $420,000, its revenue this year $5,000,000 and its approved maximum revenue $6,000,000. A bigger job will have $2,000,000 billed by 30 June 2027, with 5 per cent retention, half of it released within 12 months of that date, an 8 per cent margin and tax at 25 per cent. It needs $120,000 of plant paid in cash, and $300,000 of supplier credit and overdraft carries the job at 30 June.

At 30 June the job adds $160,000 of gross profit and $40,000 of tax, and $50,000 of retention moves out of current assets. Current assets become $1,440,000 and current liabilities $1,340,000, a ratio of 1.07 with $100,000 of headroom, and net tangible assets reach $540,000. Revenue of $7,000,000 passes the approved maximum, so the maximum must be raised before the job pushes revenue over it. The business stays in Category 2, where the regulation's formula sets the minimum for a maximum of $7,000,000 at $300,000, leaving $240,000 of headroom. The plant could cost up to $220,000 in cash before the ratio falls below 1 to 1: at $220,000 it is exactly 1.00 and passes, and at $230,000 it is 0.99 and fails.

At the job's peak in March 2027, with $1,200,000 billed on the same terms and $450,000 of supplier credit and overdraft carrying it, the ratio is 1.04 with $72,000 of headroom: inside the test, but tight.

How to read your result

Inside both tests at the peak and at the test date. On these figures the job fits, with the headroom shown at each point.

Inside both tests, but tight on the current ratio. The ratio stays at 1 to 1 or better, but under 1.10, so a slower claim or an unplanned bill could take it under. The headroom shows how much room is left.

Your revenue would pass your approved maximum revenue. The year's revenue with the job goes over the maximum on your licence. Apply to raise it before revenue passes it, and check your net tangible assets cover the minimum for the new maximum.

Your net tangible assets fall below the minimum. At that point you would hold less than the regulation's minimum for the maximum revenue the year needs.

The current ratio falls below 1 to 1. At that point current liabilities would exceed current assets. The table shows which figures drive it.

Questions owners ask

What counts as a current asset?

Cash, and amounts you expect to turn into cash within 12 months, such as claims your clients owe and retention due back within the year. The QBCC leaves out goodwill, intellectual property, debts you cannot collect, contingent assets, and related entity loans or investments it excludes from net tangible assets.

Why does retention held beyond 12 months matter?

Retention your client will not release within 12 months of the test date is a non current asset, so it drops out of current assets while the debts that funded the work stay current. A big job with long retention can push the ratio down even when it makes money.

What if the job will push revenue past my approved maximum?

Apply to the QBCC to raise your maximum revenue before your revenue for the year passes it, and make sure your net tangible assets cover the minimum for the new maximum. Your accountant can confirm the figures for the application.

Why is this not an MFR certification?

Your accepted independent accountant works out your current ratio and net tangible assets in your MFR report under the QBCC's rules. This check runs your own figures through the same tests as a scenario, so you can plan a job before you sign it.

Rules this tool uses

• 31 December 2026. Annual financial reporting is due by 31 December 2026, or the date on your QBCC notice, for categories 1 to 7 and every company licensee. Every licensee must meet a current ratio of at least 1 to 1 and the net tangible assets for its category at all times, with at least $46,000 for a builder. Source: QBCC, in force from 7 March 2025, checked 20 October 2026.
• The current ratio. A licensee must keep a current ratio of at least 1 to 1 at all times: current assets over current liabilities, never rounded up. For revenue over $800,000 an accepted independent accountant shows it at the end of the reporting period in the MFR report. Goodwill, intellectual property, debts you cannot collect, contingent assets, and related entity loans or investments left out of net tangible assets are left out of the ratio too. Source: QBCC, Current ratio requirements, checked 20 October 2026.
• Net tangible assets. Total assets less total liabilities, intangible assets and disallowed assets. Goodwill and other intangibles are excluded, loans owed to related entities count as liabilities, and loans to related entities count only where section 15(1)(k) of the MFR Regulation allows. Source: QBCC, Net tangible assets, checked 20 October 2026.
• The minimum for each category. Schedule 1, part 2 of the Queensland Building and Construction Commission (Minimum Financial Requirements) Regulation 2018 sets $12,000 for category SC1 and $46,000 for SC2, then a straight line inside each category: for category 2, ((maximum revenue less $3 million) over $9 million) times $324,000, plus $156,000, and so on to category 6. Category 7 is maximum revenue divided by 16.67. A builder licensee needs at least $46,000 whatever its category. Source: Queensland Legislation, MFR Regulation, in force from 7 March 2025, checked 21 October 2026.
• Company tax. 25 per cent for a base rate entity company, and 30 per cent for other companies. Trusts, partnerships and individuals enter the rate that applies to them. Source: ATO, Changes to company tax rates, checked 21 October 2026.

Last reviewed 21 October 2026.