Businesses who are in the building and construction industry, they have an obligation to report all the payments that they have made to the contractor in terms of services they have provided to build or construct. The Australian Taxation Office is trying to catch on contractors who are not doing the right thing by avoiding income tax & GST obligation. The due date of taxable payment reporting is 28th August each year.
This system of reporting, payment made to the contractors has been introduced in 2013 & ATO has audited more than 250,000 contractors and this report is aiding them to find who is not doing the right thing. A contractor can be a sole trader, partnership, company or trust.
You should report the following things about the contractor. Generally, you will find the information to be reported on the invoices issued by the contractors/Suppliers
- Australian Business Number
- Full name (Sole trader, Company, Partnership or Trust)
- Total payment made to the contractor, including GST
- Total GST paid to the contractor.
As advised by Reliable Bookkeeping Services, You must check ABN of a contractor before processing the payment run, just to make sure that they can actively trade.
Note, that you don’t need to report on the following things
- Payments you made to buy the material to build or construct
- All the unpaid invoices that you have received prior to 30th June should not be reported until they have been paid in the same financial year.
- Payments made to the employees, workers engaged under a voluntary agreement or under a labor-hire or on-hire arrangement. Also, Contractors who did not quote you ABN
- If you are renovating or building your own house, then you have no obligation to report to the ATO on taxable payment, as the cost incurred in building your house is non-deductible.
We can lodge your taxable payment report through our BAS portal. Just make sure your due date for the lodgement is 28th August each year. Do the right thing as ATO may be knocking your door soon. Contact us on 03 9310 7871 and visit us at www.reliablebookkeepingservices.com.au if you require any assistance.