Construction Alert: Do you understand your contractor reporting obligations?

Annual contractor reporting


From the 2013 financial year, businesses in the building and construction industry are required to report the total payments they make to contractors for building and construction services to the Australian Taxation Office (ATO) through a Taxable Payments Report.

The ATO introduced this annual reporting requirement to address the perceived longstanding tax compliance issue of contractors in the industry not correctly reporting their income. The ATO will match the payments recorded in the Taxable Payment Reports to the income disclosed by contractors in an attempt to ensure that all income has been adequately included.

Failure to lodge the Taxable Payments Report by the due date may result in penalties being levied by the ATO against applicable businesses.

WHO NEEDS TO REPORT?
You need to report 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; and
  • You have an Australian Business Number (ABN)

You are considered to be a business that is primarily in the building and construction industry if 50% or more of your business income or activity is derived from providing building and construction services in the current or prior financial year.

WHEN IS IT DUE?
The Taxable Payments Report needs to be lodged with the ATO by 21 July 2014.

WHAT NEEDS TO BE REPORTED?
The following details must be reported for each contractor and for each income year:

  • ABN (if known);
  • Name;
  • Address;
  • Gross amount paid to the contractor for the income year (inclusive of GST); and
  • Total GST included in the gross amount.

Click Here to read more about specific payments excluded from this reporting requirement.

WHAT DO YOU NEED TO DO?
You can lodge your Taxable Payments Annual Report online or in paper format.

For further information please refer to the ATO website or alternatively contact a member of our Fordham Property and Construction Services Team.

Download: construction-alert-reporting-obligations-july-2014