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. These businesses will need to report these payments to the ATO on the Taxable payments annual report.

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.

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 the ATO’s data matching to detect contractors who have not lodged tax returns or included all their income on tax returns that have been lodged.

Do you need to report to the ATO?

From 1 July 2012, you will 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 activity relates to building and construction services

• in the current financial year, 50% or more of your business income is derived from providing 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.

What will 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.

What types of payments will you need to report?

You will need to report payments you make to contractors for 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.

If you have any questions in regards to the new reporting requirements for your business, or any other ATO related queries, please contact The Quinn Group. At Quinns, our experienced team of accountants and tax agents can assist you to minimise your tax and answer any questions you may have. For more information submit an online enquiry or call us on 1300 QUINNS (784 667) to book an appointment.