The ATO offers five tips for building maintenance businesses required to report contractor payments under the Taxable Payments Reporting System.
Since 1 July 2018, the Taxable Payments Reporting System (TPRS) applies to businesses providing cleaning services, even if it’s only part of the services they provide.
Building maintenance businesses that provide cleaning services may need to complete a Taxable Payments Annual Report (TPAR) if,
- the business has an ABN
- the business pays contractors to provide cleaning services on the its behalf, and
- payments received for cleaning services make up 10 percent or more of the business’s total GST turnover, even if the business isn’t registered for GST.
These businesses need to report the total payments made to each contractor – including cash purchases – for providing cleaning services on its behalf in its TPAR, which is due by 28 August each year.
Businesses must check that they are keeping the right records so reports can be made at the required time. This includes checking contractors are working under a valid ABN.
The TPRS is a black economy measure designed to detect contractors who don’t report or under-report their income while protecting the majority of people who do the right thing.
The Black Economy Taskforce estimates that the black economy is costing the community as much as $50 billion, approximately three percent of Gross Domestic Product (GDP).
Between 2015 and 2016, the TPRS helped to protect $2.7 billion from being lost to the black economy in the building and construction industry alone, which shows how effective the TPRS is in improving tax compliance in an industry.
ATO assistant commissioner Peter Holt has five handy tips for building maintenance businesses to help make completing the TPAR quick, easy and secure:
- Make sure you’re keeping the right records for each contractor – their name, address, ABN and the total amount you paid them, including any GST. Keeping good records makes it easy and quick to complete the TPAR every year.
- If you use business software, check if it’s TPAR-ready. Talk to your software provider if you are unsure. If you don’t have TPAR-ready business software, visit ato.gov.au/TPAR for a simple worksheet that can help you record relevant information.
- If your business provides a range of services – known as ‘mixed services’ – you may need to report if payments you received for cleaning services make up 10 percent or more of your total GST turnover, even if your business isn’t registered for GST.
- Visit ato.gov.au/TPAR – it has comprehensive information to help you work out if you need to report, how to keep records of contractor payments and what details you need to report. You’ll also find helpful resources including a worksheet to record payments, case studies, fact sheets, videos and information in other languages.
- If you’re not sure whether you need to complete a TPAR or if you have questions, go to ato.gov.au/TPARmixedservices or talk to your registered tax professional, who can also lodge online on your behalf.
Image: Immortal shots via Pexels.com