The ATO and Construction Industry & Reporting Requirements

The ATO and Construction Industry

The change was announced in the May 2011-12 Federal Budget and although legislation has not been passed to ratify the rules this change is expected to take place from 1 July 2012.

This change will require every business operating in the building and construction industry making payments to contractors for services, to annually submit the details of these payments to the ATO.

The aim of the change is to improve tax compliance by contractors that operate in this industry.  The ATO will attempt to data match annual information supplied through this annual lodgement of data back to the individual contractor’s information that they have lodged through their annual taxation returns.

WHO NEEDS TO REPORT? 

Effectively any business that derives at least 50% of its income from services provided in the Australian building and construction industry will be affected and required to lodge this annual report.

THE DO’S AND DONT’S OF REPORTING: 

For each contractor you will be required to report the ABN, name, address, gross amount paid to the contractor and the GST component of this amount.

Payments made to contractors that relate solely to the provision of services directly relating to the building and construction industry are required to be declared. The following link will take you to the ATO website which provides a definitive list of activities deemed to be related to the building and construction industry.

New reporting requirements for businesses in the building and construction industry

If you are a business that is primarily in the building and construction industry and make payments to contractors for building and construction services, you will be required to report these payments to the ATO from the year starting 1 July 2012. 

Your first 'Taxable Payments Annual Report' will be due by 21 July 2013 for payments made in the 2012-13 financial year. 
 
The TaxablePayments Annual Report will require you to provide the ABN, name, address, gross amounts paid and GST included in gross amounts paid to each contractor for building and construction services. The ATO intends to use the information reported for data matching to detect those contractors who may not have included all their income or lodged tax returns. You should review your record keeping procedures now to ensure that you can readily obtain the information necessary to complete this new report from the year starting 1 July 2012.

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