16 June 2011
The Government has released a discussion paper for public consultation on the introduction of a reporting regime for payments made to contractors in the building and construction industry (BCI). The controversial proposed regime will require businesses to annually report payments made to contractors in the BCI.
The consultation paper points out that contractors in the BCI are the least compliant out of six major industry groups.
Across the compliance review, 10% of all tax invoices could not be matched to a payee due to non-quotation or invalid quotation of an ABN. Of the approximate 11,500 matched entities in the initial analysis, 34% were contractors in the BCI. 31% of those contractors matched to ATO records had not lodged a tax return, with a further 20% having lodged but omitting all or part of their income.
The measure will utilise the transaction reporting by purchasers' component of (Division 405 in Schedule 1 to the TAA 1953) and will require any business paying contractors in the BCI for their services (not for goods) to report the contractor's payment and ABN annually to the ATO.
The definition of what falls within the BCI is currently quite broad and is a question raised in the consultation paper.
The Government has flagged that the BCI is the first of several industries considered with the commercial cleaning industry next in line.
Follow Bates Cosgrave News on Twitter @batescosgraveCA
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.