The Government announced in the last budget that from 1 July 2012 businesses in the building and construction industry will have to report, annually, details of payments made to contractors to the Australian Taxation Office ("ATO").
Treasury has released exposure draft regulations to introduce the system.
A business is defined as being primarily in the industry if more than 50% of the purchaser's business income is derived from providing building and construction services in the current financial year, or at least one of the two financial years prior to the current financial year.
It is important to note that purchasers are not required to report on payments to suppliers for goods only. However, if the purchaser is supplied both goods and services it will be reportable, provided that the services are not merely incidental to the supply of the goods.
The business will be required to report actual payments made, and will be required to include the following details:
- The contractor's name;
- The contractor's ABN;
- The contractor's address (if known);
- The total amount paid or credited to the contractor over the income year
- Whether any GST has been charged;
- Any other information the Commissioner may require.
Business will only have to provide an aggregate report for each contractor they make payments to during the income year. The report will be required to be lodged on an annual basis, 21 days after the conclusion of the financial year.
Businesses will have to implement systems to capture this information from 1 July 2012.
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