What you need to know about Taxable Payments ReportingKelly
On July 21, 2013, businesses in the building and construction industry will have to submit their first taxable payments annual report to the ATO.
The report outlines how much these businesses pay to contractors for building and construction services in the 2012-2013 financial year.
The ATO’s aim is to improve tax obligation compliance by contractors who aren’t currently doing the right thing. As with any new tax legislation, it’s important for businesses to check they’re keeping the correct records. If this change does apply to you and you don’t record payments from 1st July 2012 onwards in your small business accounting software, you are going to face a lot of work in June/July! Or, you will probably face hefty accounting bills.
Furthermore, anyone still using paper, or spreadsheets or a bookkeeping software program that doesn’t allow easy flagging of contractor payments may struggle with their EOFY activity. You will need to figure out how you can most easily work with this reporting change. It’s a good idea for owners of businesses that pay building and construction contractors to record these contractor payments straight away with up to date accounting software like Cashflow Manager.
The report has to include the following details for each contractor:
- Name and address
- Total gross amount paid
- Total GST included
So make sure the software program you use for your business is able to record these important details.
Businesses need to submit the taxable payments annual report if they:
- Are in the building and construction industry
- Make payments to contractors for building and construction services (and)
- Have an Australian business number (ABN)
The ATO considers you a part of the building and construction industry if:
- 50% of more of your business activities in the current financial year relates to building and construction services.
- 50% or more of your business income in the current financial year 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.
For more information on taxable payments reporting visit ATO’s website to find:
- A list of activities and occupations considered to be building and construction services
- Examples of where reporting is required
- Exclusions from reporting requirements
- Other imporant informational resources.