Taxable payments reporting now required for use of building and construction contractors

09 Apr 2013

This July, businesses in the building and construction industry are required to submit their first Taxable Payments Annual Report to the ATO. The report outlines the total payments they make to each contractor for building and construction services for the 2012–13 financial year.

The aim is to improve tax obligation compliance by contractors who are currently not doing the right thing.

As with any new tax legislation, it’s important for businesses to check they’re keeping the correct records. If this legislative change applies to you and you don’t record payments from 1st July 2012 in your accounting software, you may face a lot of work in June/July 2013. Or, you may face hefty accounting bills. Make sure now that you have the details required for the Taxable Payments Annual Report.

Anyone using paper, a spreadsheet or a product that doesn’t allow easy flagging of contractor payments may struggle with their EOFY activity, so figure out now how you can most easily work with this reporting change.

MYOB CEO Tim Reed says, “Owners of businesses that pay building and construction contractors should capture these contractor payments straight away via up-to-date accounting software, such as MYOB LiveAccounts or MYOB AccountRight. 

“Otherwise they could be playing serious catch up when the first taxable payment annual report is due for lodgement in July 2013. A tax penalty for late/non lodgement is a stress any business owner can do without.”

Key information

Businesses need to submit the taxable payments annual report if they:

  • are in the building and construction industry
  • make payments to contractors for building and construction services, and
  • have an Australian business number (ABN).

You are considered to be part of the building and construction industry if:

  • 50% or more of your business activities in the current financial year relates to building and construction services.
  • 50% or more of your business income in the current financial year is derived from providing building and construction services.
  • 50% or more of your business income in the financial year immediately before the current financial year is derived from providing building and construction services.

Building and construction services include 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:

  • Alteration
  • Assembly
  • Construction
  • Demolition
  • Design
  • Destruction
  • Dismantling Erection
  • Excavation
  • Finishing Improvement
  • Installation
  • Maintenance
  • Management of building and construction services Modification
  • Organisation of building and construction services
  • Removal
  • Repair
  • Site preparation

The details to report will generally be contained in the invoices businesses receive from their contractors.  The report should 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;
  • any other information the Commissioner may require.

The first annual report is due 21 July 2013 for payments made in the 2012–13 financial year. In this first year businesses that lodge their business activity statements quarterly may lodge by 28 July 2013.

The information reported about payments made to contractors will be matched against other information held by the ATO to detect contractors who have not:

  • lodged tax returns, or
  • included all their income in returns that have been lodged.
  • Payments for materials only, such as building supplies and materials.
  • Unpaid invoices as at 30 June each year. For example, if you receive an invoice in June 2013, but you do not pay that invoice until sometime in July 2013, you report that payment in the 2013-14 Taxable payments annual report.
  • Pay as you go withholding payments.

For more information about taxable payments reporting visit www.ato.gov.au/taxablepaymentsreporting to find details such as:

  • a list of activities and occupations that are considered to be building and construction services.
  • examples of situations where reporting is required.
  • exclusions from reporting requirements; and
  • how to register to participate in an online seminar from your home or business.

-ENDS-

For further statistics, comment or other information please contact:

Angely Grecia

MYOB Public Relations Consultant

02 9089 9071 / M: 0449 169 997 / 

angely.grecia@myob.com

Micky Zucker

Haystac Public Affairs Account Manager

02 8094 7430 / M: 0413 858 733 /myob@haystac.com.au

About MYOB

Established in 1991, MYOB is now Australasia’s largest business management software provider. Its 50+ products and services have been employed by more than one million businesses in Australia and New Zealand. MYOB serves businesses of all ages, types and sizes, delivering solutions that simplify accounting, payroll, client management, websites and much more. With a network of more than 20,000 accountants and other professional partners, it provides the support and tools that help make business life easier. Today, MYOB is extending its solutions online and delivering innovation through cloud computing, enabling clients to make smarter connections with their business partners and customers:http://myob.com.au/smarterconnections.