CIB FEATURE ARTICLE – TAXABLE PAYMENT REPORTING – BUILDING & CONSTRUCTION INDUSTRY

Updated November 12th 2013

In the 2011/12 Federal Budget, the Government announced that new reporting requirements would be introduced for the building and construction industry.

The aim of the system is to improve compliance with tax obligations by those contractors who are currently not doing the right thing. The information reported about payments made to contractors will be used for data matching to detect contractors who have not, lodged tax returns, and that have not included all their income in returns that have been lodged.

WHO NEEDS TO REPORT?

From 1 July 2012 you need to report if all the following apply:

  • You are a business that is primarily in building and construction
  • You make payments to contractors for building and construction services
  • 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
  • In this financial year, 50% or more of your business income is derived from providing building and construction services
  • 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.

DETAILS YOU NEED TO REPORT

For each contractor, you need to report the following details each financial year:

  • ABN
  • Name
  • Address
  • Gross amount you paid for the financial year (this is the total paid including GST)
  • Total GST included in the gross amount you paid.

The details you need to report will generally be contained in the invoices you receive from your contractors.

WHEN TO REPORT

The taxable payments annual report is due 21 July each year. The first taxable payments annual report is due 21 July 2013 for payments made in the 2012-13 financial year. In this first year, if you lodge your business activity statements quarterly, you may lodge by 28 July 2013.

PAYMENTS YOU DO NOT REPORT

  • Payments for materials only
  • Unpaid invoices as at 30 June each year
  • Pay as you go withholding payments
  • Payments for private and domestic projects. You will not need to report if you are a home owner making payments to contractors for building and construction services, for example if you are building or renovating your own home

LODGING YOUR TAXABLE PAYMENTS ANNUAL REPORT

You can lodge your report online or on paper.

Online

If you use commercial software, check with your software provider that you will be able to produce the new annual report. More information about lodging your new annual report online will be available closer to the due date for lodgment of the report.

Paper

If you intend to lodge a paper form, you must complete and send the ATO taxable payments annual report. You must use this ATO form which can be ordered online or by phone.

Actions to Be Taken

While the first report does not need to be lodged until July 2013, steps should be taken to ensure that you have a system in place to effectively capture the information requirements from 1 July 2012.

We will be identifying entities that will be subject to the new reporting requirements and be in contact before the end of the financial year to discuss the actions that need to be taken.

If you have any further questions please do not hesitate to contact your accountant at CIB Accountants & Advisers.