From 1 July 2012, businesses in the building and construction industry need to report to the ATO each year, the total payments they make to each contractor for building and construction services.
Building and construction services, as well as the obvious, include a wide range of related activities including demolition, design and repair if they are performed on, or in relation to, any part of a building, structure, works, surface or sub-surface . You are not required to report on payments where the invoices are for materials only, such as building supplies and materials. Likewise, you do not report on payments made to employees and those engaged under a voluntary agreement to withhold, or under a labour hire agreement.
The first annual report is due 21 July 2013 for payments made in the 2012-13 financial year. In this first year businesses that lodge their business activity statements quarterly, may lodge by 28 July 2013.
The information reported about payments made to contractors will be used for ATO data matching to detect contractors who have not lodged tax returns and/or included all their income in returns that have been lodged. It is no surprise that the aim of the system is to improve compliance with tax obligations by those contractors who are currently not doing the right thing.
For more information refer to the ATO website link below or contact our office for assistance.