For clients in the building & construction industry. As part of the 2011 – 12 federal Budget, the government announced the introduction of ‘Taxable Payments Reporting’. The system requires employers of contractors to report on details of those contractors and amounts paid to them each year.
The aim of the system is to improve compliance by contractors who are not meeting their tax obligations. The information reported will be used for to detect contractors who have not lodged tax returns, or who have not included all income earned on their tax returns. Contractors may be Companies / Partnerships / Trusts / Sole Trader Individuals.
Impact on Contractors
- Employers will be reporting on Contractors income
- Contractors targeted will be those whose income declared does not match that reported by employers
- Contractors targeted also include those whose tax obligations are not up-to-date
Impact on Employers of Contractors
- Required to lodge a Taxable Payments Annual Report by 21st July each year
- Extension exists to 25th August 2013 for the initial year if lodged by Tax Agent – ie for Financial Year Ended 30 June 2013
- For each contractor, details required to be reported are these:
- Amount Paid Including GST for the Financial Year
- Total GST Included
Information Not Reported
- NIL is reported for payments for building supplies and materials
- NIL is reported for Contractor Invoices that are outstanding at 30 June (ie not yet paid)
This news item has been addressed to building & construction clients only.
If you employ contractors, and have not lodged the new report for financial year ended 30 June, 2013 please advise us.
If you are a contractor (regardless of your business structure), take note of the new requirements, and be sure to meet your compliance obligations. Your tax submissions will be reviewed as part of this process.