November 27, 2012
Compliance, Building & Construction, Contractors
Taxable payments reporting - building and construction industry Overview From 1 July 2012, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year. You need to report these payments to us on the Taxable payments annual report.
To make it easier to complete the annual report, you may need to check the way you currently record your contractor payment information.
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.
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 our data matching to detect contractors who have not:
- lodged tax returns
- included all their income on tax returns that have been lodged.
Who needs to report?
From 1 July 2012, you need to report if all of the following apply:
- you are 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 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 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
- 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.
It is important to check the way you keep your contractor payment information to make sure you have the details you need to complete the Taxable payments annual report.
Payments you need to report
You will need to report payments you make to contractors for building and construction services.
Below is a list of some of the occupations and work activities that satisfy the definition of building and construction services (refer to ATO website for a full list):
- Architectural work (including drafting and design)
- Assembly, installation or erection of pre-fabricated houses
- Block laying
- Cabinet making (including joinery and off-site fabrication for installation at a building site)
- Concreting (including formwork, pouring and finishing)
- Drainage work
- Electrical work (including electrical inspection)
- Erection of frames
- Erection of scaffolding
- Excavation and grading
- Gas plumbing
- Glass and glazing work
- Hanging or installing doors
- Installation of fittings
- Installation of hard-wired alarm systems (security, fire, smoke and similar alarms)
- Installation of hot water systems
- Installation of septic tanks Installation of solar devices (for example, hot water or electricity connections)
- Installation of windows
- Installation or work on devices for heating and cooling
- Insulation work (walls, roofs, windows and similar structures)
- Land clearing
- Landscaping construction (including paving and design)
- Painting (internal and external surfaces, including roofs)
- Plastering (or other wall and ceiling construction)
- Plumbing work (including plumbing inspection)
- Preparation of site Rendering (or other internal or external surface finishes)
- Retaining wall construction
- Roofing and guttering
- Swimming pool installation
- Swimming pool construction (below ground concrete or fibreglass)
- Tiling (walls and similar structures)
- Timber work
When to report
Your 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 statement quarterly, you can lodge by 28 July 2013.
Payments you do not report
Payments for materials only
You are not required to report on payments where the invoices are for materials only, such as building supplies and materials.
Unpaid invoices as at 30 June each year
Do not report any unpaid invoices as at 30 June each year. For example, if you receive an invoice in June 2012, but you do not pay that invoice until some time in July 2012, you report that payment in the 2012-13 Taxable payments annual report.
Pay as you go withholding payments
You do not report payments that are required to be reported in a Pay as you go (PAYG) withholding payment summary annual report or a Pay as you go (PAYG) withholding where ABN not quoted annual report - for example, payments to:
- workers engaged under a voluntary agreement to withhold
- workers engaged under a labour hire or on-hire arrangement
- contractors who do not quote an ABN*.
* Where an ABN is not provided, the payer must withhold under the existing pay as you go withholding arrangements. If there are instances of no-ABN withholding, you can report the details in the new Taxable payments annual report instead of the Pay as you go (PAYG) withholding where ABN not quoted annual report.
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.
Information for contractors within the building and construction industry
If you are a contractor and you do not pay other contractors, then you do not need to do anything. From 1 July 2012, businesses that are primarily in the building and construction industry that pay you for building and construction services will be required to report these payments to us each year. The information reported will be used for data matching to detect those contractors who may not have included all their income in tax returns or not lodged tax returns.
For enquiries, phone May Partners on 5452 1155