Your depreciation policy directly affects your Net Tangible Assets (NTA). NTA is a measure used by the QBCC and other Australian licensing bodies to assess financial capacity. These questions cover how depreciation interacts with your licence obligations and what to check before annual reporting.
How does depreciation affect my QBCC licence?
The QBCC establishes minimum financial requirements for licensed builders based on net tangible assets. Fixed assets count as tangible assets only when properly recorded on the balance sheet. If plant and equipment has been written off for tax purposes but isn’t maintained at accounting value in records, NTA becomes understated. For builders operating near licence thresholds, this can transform a compliant position into a reportable breach.
My QBCC annual reporting is coming up. What should I check about depreciation?
Three critical checks:
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Are your fixed assets carried on the balance sheet at accounting value rather than tax value?
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Is the NTA calculated from those figures above the threshold for your licence category?
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If significant asset disposals occurred during the year, has the NTA impact been assessed before the return is lodged?
These checks should occur before financial statements are finalized, not after.
Are there other Australian licensing regimes that use NTA thresholds?
Yes. NTA-based financial requirements apply across multiple Australian licensing schemes:
- 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
- NDIS provider registration at higher registration groups
The regulatory body uses NTA as a proxy for financial capacity and stability.