For businesses in the Building and Construction industry, there has been an annual requirement for reporting of payments made to contractors providing building and construction services as from 1 July 2012.
Cleaning and courier services are included in the reporting regime from 1 July 2018. The final legislation includes an amendment to exempt entities from the reporting requirements if the total amount of courier or cleaning services payments received are less than 10% of the entity’s GST turnover.
- Law companion draft ruling LCR 2018/D6 Expansion of the taxable payments reporting system to contractors in the courier and cleaning industries
- New tax reporting requirements for cleaners and couriers
Road freight, IT or security, investigation or surveillance services
A proposal set forth in the 2018 budget includes ‘road freight’, ‘IT’, ‘security, investigation or surveillance’ services in the reporting regime starting from 1 July 2019. See Treasury consultation documents and follow the progress of legislation here: Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Bill 2018.
General Reporting Requirements
The requirement is to lodge an annual summary of payments, with sub-totals for each contractor paid.
The Taxable payments reporting requirements operate as an integrity measure, with the Tax Office using the information for data matching; i.e. to compare the reports data with income reported by the contractors in their tax returns.
Returns are required on a cash basis, which will create reconciliation issues if an accruals basis of accounting is adopted for other purposes – something the Tax Office has previously publicly stated will be taken into account.
No separate registration is required, so no “nil” returns are required. However from a compliance point of view, the Tax Office is actively checking up on businesses with a Building & Construction industry code in their annual tax return.
Contractor Services Only
This requirement only applies where non-incidental services are provided as part of the contractor’s invoice; materials-only invoices do not need to be reported. This requirement is not affected by the business structure of the payee.
Payments made to labour hire firms are not caught, and payments caught under other PAYG provisions (such as wages) are of course excluded.
If tax is withheld (for example if a valid ABN is not provided by the supplier) the amount withheld will be included in the taxable payments report.
The taxable payments annual report is due to be lodged by 28 August each year.
The reports can be lodged online, or manually as a paper return of ATO form number Nat74109
For manual summary preparers, an example worksheet (PDF) has been made available.
The annual reports are prepared on a cash basis regardless of your BAS method or status. In this way it is similar to the employee PAYG requirements).
To be subject to the reporting requirements, there are some important definitional hurdles:
- You must be a business that is primarily in the building and construction industry
- You only need to report payments to contractors for building and construction services
- You must have an Australian business number (ABN)
“primarily in the building and construction industry”
– means 50% or more of your business income is derived from providing, or relates to, building and construction services; or was so derived in the immediately preceding financial year.
“building and construction services”
- See here for examples of building and construction services
- See here for examples of buildings, structures, works, surfaces or sub-surfaces
Payments you don’t need to report
Payments made as a homeowner on personal projects are excluded from the reporting requirements, as are
- Payments for materials only
- Unpaid invoices as at 30 June each year
- Pay as you go (PAYG) withholding payments
- Payments for private and domestic projects
- Payments within consolidated groups
See further ATO information here.
Tax Office links:
- Taxable payments reporting – building and construction industry
- Website: www.ato.gov.au/taxablepaymentsreporting
- Phone enquiries: 13 28 66
- Get forms: 1300 720 092
- see also Limitation of Tax Deductions for Non-compliant Payments
This page was last modified 2018-10-18