Once again it is year end and 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.

Background

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. This was introduced to improve compliance with tax obligations by those contractors who are currently not doing the right thing. There is no doubt the ATO will increase audit activity in this industry.

The information reported about payments made to contractors will be used for the ATO's data matching to detect contractors who have not:

  • lodged tax returns
  • included all their income in returns that have been lodged.

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
  • 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 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.

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