How to prepare for upcoming contractor payment changes

Does your business enjoy the services of building and construction industry contractors? No? Then you’re off the new ATO hook! Feel free to move on, as this article’s not for you…

Yes, you do hire this type of contractor? Did you know you need to report to the ATO any payments you make to them from 1 July, if your business meets certain criteria?

In last year’s Federal Budget, the government announced the introduction of taxable payments reporting for businesses in the building and construction industry.

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 payments need to be reported on the Taxable PaymentsAnnual Report.

Businesses need to report from the EOFY onwards 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).

Recent research MYOB conducted showed that not only did the majority of business owners not know about the new reporting legislation, but the majority of those who should be in the know – the business owners it applies to – also had no idea.

Ouch… that could get a number of people into some pretty sticky situations when their first Taxable payments annual report is due for lodgement on 21st July 2013, for payments made in this next financial year. In this first year if you lodge your business activity statement quarterly, you may lodge by 28 July 2013.

Use accounting software? You’re in luck if you’re with a reliable provider because they would have updated software to integrate this reporting need. For example, at MYOB we’ve updated our relevant accounting programs so you easily select which payments or suppliers (depending on your software) you need to report on. When you’re ready for reporting, you can select or deselect the relevant transactions.

Then you simply ask the software for a report containing all those transactions, from which your accountant, bookkeeper or similar Australian financial advisor creates the report the ATO needs. Note that once the ATO is ready to accept electronic submissions we will provide an update to support this also.

Whatever method you use to get the required information back to ATO, make sure that you start recording it from 1 July or you could face some serious paperwork when the next EOFY hits. Taking the time to confirm now that you’re good to go with this reporting requirement will save plenty of time down the track so you can concentrate on doing what you really love.

We are Australian Small Business Advisers  helping small to medium businesses with a specialty of understanding the space that relates to the Building and construction industry.For more information about our services contact us on 9597 9966 at 563 North Road Ormond Victoria 3204 Australia