New building industry taxable payments reporting system
Businesses in the building and construction industry now need to report to the ATO (from the 2012/13 income year) the total payments they make each year to each contractor for building and construction services.
The aim of the system is to improve voluntary compliance with tax obligations by those contractors who are currently not doing the right thing.
Businesses will only need to report if all of the following apply:
- They are primarily in the building and construction industry;
- They make payments to contractors for building and construction services; and
- They have an Australian business number (ABN).
Businesses are only required to report the total of the payments made (i.e., on a cash basis) to each contractor during the year, not the individual amounts.
Where the invoice from the contractor includes both labour and materials, whether itemised or combined, it is the total amount of the payment that needs to be reported.
The first annual report is due by 21 July 2013 for payments made in the 2012/13 financial year, although if businesses lodge their BASs quarterly, for this first year they may lodge by 28 July 2013.
Editor: Please contact us if you think these new reporting rules may affect you.