Do you run a cleaning or courier business in Australia? If so, you’d want to know that buried amongst the recent Federal Budget announcements were new reporting requirements for these industries.
From 1 July 2018, the taxable payments reporting system will extend beyond the building industry to cleaning and courier businesses. This means that these businesses will need to report payments they make to contractors (individual and total for the year) to the ATO.
The building industry has had this form of “enhanced reporting” since 2012-13. The result was an additional $2.3 billion in income tax and GST liabilities collected through voluntary reporting in the first year alone.
The first annual report for affected cleaning and courier companies is due in August 2019. The types of information reported to the ATO about contractors include:
- ABN (where known)
- Total paid to the contractor (including GST) for the financial year, and
- Total GST included in the gross amount that was paid.
The extension of the taxable payments system was a recommendation of the Black Economy Taskforce to minimise underreporting and evasion. With the black economy estimated to be worth around $25 billion per year (or around 1.5% of GDP), it’s unlikely that the taxable reporting system will be limited to just the building, cleaning and courier industries. In its report to Government, the Taskforce recommends the further expansion of the system to include labour hire, owner-builders, the home improvement sector, and IT contractors.
Interestingly, you would assume that the shift towards a cashless society would reduce the impact of the black economy. However, technology is an opportunist. A cashless society does not mean that people will not find a way to rort the system. This is why the Budget also announced an immediate ban on the manufacture, distribution, possession, use or sale of sales suppression software that enables businesses to understate their income by untraceably deleting selected transactions from electronic records in point of sale equipment.
Regardless of what industry you’re in, it is important to observe the new regulations.