As part of the 2011/12 Federal Budget, the Government announced the introduction of taxable payments reporting for businesses in the building and construction industry. Taxable payment reporting system is applicable to those primarily in the building and construction industry and who make payments to contractors for building and construction services. The aim of the new 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 by ATO for data matching to detect contractors who have defaulted with their tax obligation. For instance, those who have not:

• Lodged their tax returns
• Included all their income on tax returns that have been lodged.
• Registered for the GST even though they are required to do so.

Do you need to report?

You need to report to the ATO if all of the following apply:

• you’re a business that is primarily in the building and construction industry
• you make payments to contractors for building and construction services
• you have an Australian business number (ABN).

You’re 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 income is derived from providing building and construction services
• in the current financial year, 50% or more of your business activity relates to 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 – if known
• name
• address
• gross amount you paid for the financial year – this is the total amount paid, inclusive of goods and services tax (GST)
• total GST included in the gross amount you paid.

You are required to report the payments you make to contractors in the financial year in which the payments are actually made (cash basis).

Payments you need to report

You need to report payments you make to contractors for building and construction services. The definition of building and construction services is broad – it includes any of the activities listed below if they are performed on, or in relation to, any part of a building, structure, works, surface or sub-surface. For further details on payments you need to report, refer to the 2 ATO links below:

Appendix 1:

Appendix_1__Examples_of_building_and_construction_services
Appendix 2:

Appendix_2__Examples_of_buildings__structures__works__surfaces_or_sub_surfaces
Payments you don’t report

You do not need to report the following payments:

• Payments for materials only
• Unpaid invoices as at 30 June each year
• Pay as you go withholding payments
• Payments within a consolidated group

When to report

Your Taxable payments annual report is due by 28 August each year. Penalties may apply for not lodging your annual report by the due date.

How can we help?

At Infinity Group we understand that the industry is dynamic and challenging, therefore we offer a range of comprehensives services including:

• Set-up of the most tax effective business structure to ensure protection of assets and minimisation of tax
• Preparation and lodgement of BAS’s
• Preparation and lodgement of annual financials (if applicable) and tax returns
• Preparation and lodgement “taxable payments annual report”
• Bookkeeping
• Assist/provide advice (general) with income protection and other insurance
• Cash flow projections
• Tax planning

To book an obligation free consultation with one of our friendly staff, please call (03) 9792 2772 or email info@infinitygrp.com.au