In last year’s Federal Budget, the government announced the introduction of taxable payments reporting for businesses in the building and construction industry. This is yet another compliance burden placed on small businesses.
From 1 July 2012 businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year.
These payments need to be reported on the Taxable Payments Annual Report. To make it easier to complete the annual report, your business may need to change the way you currently record your contractor information.
The aim of this new reporting system is to improve compliance by certain contractors of their tax obligations. The information reported about payments made to contractors will be used for data matching to detect contractors who have not:
- lodged tax returns.
- included all their income in returns that have been lodged.
Who needs to report
From 1 July 2012 you need to report if all of the following apply:
- you are a business that is primarily in the building and construction industry;
- you make payments to contractors for building and construction services; and
- you have an Australian business number (ABN).
You are considered to be a business that is primarily in the building and construction industry if any of the following apply:
- in the current financial year, 50% or more of your business activity relates to building and
- construction services; or
- in the current financial year, 50% or more of your business income is derived from providing building and construction services; or
- in the financial year immediately before the current financial year, 50% or more of your
- business income was derived from providing building and construction services.
What needs to be reported
Businesses would be required to report actual payments made and include the following details:
- the contractor’s name;
- the contractor’s ABN;
- the contractor’s address (if known);
- the total amount paid or credited to the contractor over the income year;
- whether any GST has been charged; and
- any other information the Commissioner may require.
Businesses are only required to provide an aggregate report for each contractor they make payments to during the income year.
When the payments need to be reported
The first annual report is due 21 July 2013 for payments made in the 2012-13 financial year. If you lodge your business activity statement quarterly, in this first year you may lodge by 28 July 2013.