Quick answer
QBCC licence categories are financial classifications for contractor-type licences, based on your Net Tangible Assets (NTA) and Maximum Revenue (MR). There are nine categories in total: SC1 and SC2 for smaller, self-certifying businesses, and Categories 1 to 7 for businesses with higher turnover that need an accountant-prepared MFR report.
“Licence category” is one of the most misunderstood terms in the QBCC system, largely because it has nothing to do with your trade. A carpenter, a builder and a plumber can all sit in the same financial category, or in completely different ones, depending entirely on their business’s financial position, not what work they do.
This guide explains what each category actually means, how QBCC calculates which one you fall into, and what changes as you move up or down the scale.
Table of Contents
1. What Are QBCC Licence Categories?
QBCC licence categories are the financial classification system applied to contractor-type licences under the Minimum Financial Requirements (MFR) framework. There are nine categories in total, based on a business’s Net Tangible Assets (NTA) and the Maximum Revenue (MR) that position supports.
The category is not about your trade or skill level at all, it is purely a financial classification that determines how much annual turnover you are permitted to earn under your licence, and how much financial reporting QBCC expects from you each year. If you are still deciding on the broader licence class or type before thinking about category, compare the main QBCC licence options first.
Category is financial, not technical
Your licence category has nothing to do with how skilled or experienced you are. It only reflects the financial capacity of your business, measured in net tangible assets.
2. SC1 and SC2: The Self-Certifying Categories
SC1 and SC2 are designed for smaller contractors and sole traders, and their defining feature is self-certification: you declare your financial position on the application form itself, without needing a formal report prepared by an external accountant.
Self-certifying does not mean unverified. Both categories must still genuinely hold the required net tangible assets, and QBCC can audit either category at any time. Since March 2025, SC1 and SC2 licensees also no longer need to submit annual financial reporting, though the underlying obligation to maintain the required position never goes away.
Builders cannot start at SC1
Builder licences cannot be issued in the SC1 category. A builder’s minimum starting point is SC2, reflecting the larger financial exposure that comes with running whole construction projects rather than a single trade.
3. Categories 1 to 7: The Higher-Turnover Tiers
Once a business’s Maximum Revenue exceeds $800,000, it moves into the numbered categories, from Category 1 through to Category 7 at the top end. Each category corresponds to a band of Maximum Revenue, and moving up a category, say from Category 2 to Category 3, requires demonstrating a higher NTA position through a formal report.
The exact dollar boundaries within Categories 1 to 7 are set out in the MFR Regulation and are calculated using a formula that converts your NTA into a corresponding Maximum Revenue figure, which is why QBCC provides an online calculator rather than a simple lookup table.
Higher categories draw closer attention
QBCC is more likely to follow up non-compliant financial information with a formal show cause process for Categories 4 to 7 than for the lower categories, reflecting the larger financial exposure involved.
4. How Your Category Is Calculated
Your category flows directly from your Net Tangible Assets (NTA), calculated as your total assets, minus intangible assets like goodwill and patents, minus all liabilities, minus any disallowed assets such as recreational vehicles, unlisted shares or cryptocurrency.
- ✓Calculate your Net Tangible Assets: total assets minus intangibles, liabilities and disallowed assets.
- ✓Convert NTA into a Maximum Revenue figure using QBCC’s published formula or online MR/NTA calculator.
- ✓Maintain a current ratio, current assets divided by current liabilities, of at least 1:1.
- ✓Optionally rely on a deed of covenant and assurance from a director or related party, only available to Categories 1 to 7.
A worked example from QBCC’s own guidance: a business with $10 in net tangible assets but a $56,000 deed of covenant and assurance from its director reaches a combined position of $56,010, which supports a Maximum Revenue of roughly $1,000,200. This shows how the deed mechanism can materially change a company’s category without changing its own balance sheet.
SC1 and SC2 cannot use a deed of covenant
The deed of covenant and assurance mechanism is only available to licensees in Categories 1 to 7. SC1 and SC2 licensees must meet their NTA requirement using their own assets.
5. Reporting Obligations by Category
Reporting obligations scale sharply once you cross from SC2 into the numbered categories.
Company licensees carry annual reporting obligations at every category, individuals only pick up that obligation once they cross into Category 1 or above. Missing your annual reporting deadline can lead to licence cancellation, regardless of which category you sit in.
Companies are never fully exempt
Unlike individual licensees, a company generally cannot avoid annual reporting just by sitting in a low category. Confirm your obligation with your accountant regardless of how small your company’s turnover is.
6. What Happens If You Outgrow or Fall Short of Your Category
Your category is not a one-time assessment, it is a position you must continuously maintain, and two specific triggers require you to act.
- ✓Exceeding your Maximum Revenue by more than 10% requires a new declaration or MFR report before you continue operating at that level.
- ✓A drop in Net Tangible Assets of more than 30% requires an MFR report to confirm you are not at risk of default.
- ✓A significant change in business structure, such as a change of directors, shareholders or trustee, can also trigger a fresh report.
If you fail to report a significant NTA decline and continue operating above your genuine capacity, QBCC can take enforcement action, including suspension, particularly where the situation poses a demonstrated risk to consumers or creditors.
Report changes proactively, not reactively
If you notice your NTA position dropping, speak with your accountant and assess whether you are still in the correct category before QBCC’s own monitoring picks it up.
7. How QBCC Express Helps You Choose the Right Category
Choosing the wrong category, too low to support real growth, or too high and carrying unnecessary reporting burden, is one of the more expensive mistakes a growing business can make. QBCC Express helps applicants and existing licensees work out the category that genuinely fits their financial position and growth plans.
Use the QX Checker to sense-check your position, or start with the QBCC licence options page to confirm the right pathway for your business.
Get advice before, not after, a growth spurt
The best time to review your category is before your turnover approaches your current limit, not after you have already exceeded it by 10%.
8. FAQs
How many QBCC licence categories are there?
Nine in total: SC1, SC2, and Categories 1 through 7, each defined by a Maximum Revenue band supported by a corresponding Net Tangible Assets position.
Does my licence category depend on my trade?
No. Category is purely a financial classification based on your business’s NTA and turnover, entirely separate from your licence class or trade.
Can a builder hold an SC1 licence?
No. Builder licences cannot be issued at the SC1 level. SC2 is the minimum starting category for a builder.
Can I use a director’s assets to boost my category?
Yes, through a deed of covenant and assurance, but only if you hold a licence in Categories 1 to 7. SC1 and SC2 licensees cannot rely on this mechanism.
What happens if my turnover grows past my category limit?
You must not exceed your Maximum Revenue by more than 10% without first submitting a new declaration or MFR report supporting the increase.
Do SC1 and SC2 licensees need to submit financial statements every year?
No, not since the 2025 changes removed annual reporting for individual SC1 and SC2 licensees, though they must still genuinely meet their category’s NTA requirement at all times.
Where should I start if I am unsure which category applies to me?
Start with the QBCC licence options page or contact QBCC Express with your business’s approximate turnover and asset position.
Ready to confirm your correct licence category?
Get clarity on which of the nine categories genuinely fits your business before your next application or renewal.
Book a free consultation with QBCC Express
