A special Australian Taxation Office reporting requirement once restricted to the building and construction industry has expanded in the past year, and that means more businesses need to take heed or risk potential penalties.
In its efforts to create greater clarity around contractors and sub-contractors, the ATO has expanded its reach to require a range of additional industries to lodge a Taxable Payments Annual Report (TPAR) by August 28 each year.
Businesses providing cleaning, courier, road freight, IT and security services, including investigation and surveillance, are now caught in the net.
It’s also worth noting that government entities from the local to federal level may also be required to lodge, providing information on any grants they may have paid to contractors.
Planning for the year ahead
While the due date has passed this year for some industry sectors, namely building and construction, cleaning and courier services, it’s a timely reminder for the rest to get their affairs in order for next year.
The first TPARs for businesses in road freight services, IT services and security services are due on August 28 next year.
The primary function of the TPAR is to allow the ATO to cross-reference the payments made to contractors within these industries with the payments these contractors report to have received.
This allows the ATO to determine whether contractors and sub-contractors have lodged a tax return and, if they have, whether they have reported all their income.
While this adds another layer of compliance for certain industries, it’s important to get professional advice to determine in the first place whether your business needs to lodge a TPAR at all and, if so, how to keep abreast of ATO requirements.
Keeping on track with payments
The situation is complicated further because some businesses provide services across a number of sectors affected by the new TPAR provisions. This means you’ll need to keep track of what percentage of total payments are received from each of the relevant business sectors.
If you’re uncertain about how to approach the issue, it’s important to seek sound professional advice because, as always, penalties may apply for late lodgements.
The team at MWM Advisory has kept abreast of the changes and we’ve already helped many of our clients meet their obligations.
For further information, contact an MWM Advisory team member at mwmadvisory.com.au/contact or phone 5596 9070.