From 1 July 2018, the taxable payments reporting system will extend beyond the building industry to cleaning and couriers. This means that these businesses have to report payments they make to contractors (individual and total for the year) to the ATO. By ‘payment’ the ATO means any form of consideration including non-cash benefits and constructive payments.
The building industry has had this form of “enhanced reporting” since 2012-13. The result was an additional $2.3 billion in income tax and GST liabilities collected through voluntary reporting in the first year alone.
What is a cleaning and courier service?
The terms ‘cleaning service’ and ‘courier service’ take their ordinary meaning.
Courier services refer to the delivery of goods and items (to any place in Australia) using transport vehicles. Excluded from this are the following: freight services, blood and blood product couriers, and passenger transport.
A cleaning service is any service where a structure, vehicle, place, surface, machinery or equipment has been subject to a process in which dirt or similar material has been removed from it. This includes office cleaning, street cleaning, swimming pool cleaning, park and facilities cleaning, or cleaning for certain types of cultural or sporting events.
Businesses that supply services including courier or cleaning services are also part of the list .
What you need to do
The first annual report for affected cleaning and courier companies is due by 29 August 2019 for the 2018-19 year. The types of information reported to the ATO about contractors include:
- – ABN (where known)
– Total paid to the contractor (including GST) for the financial year, and
– Total GST in the paid gross amount.
Early planning is advisable if you deem the new requirements will affect your business, further, this is most especially important to realize when you do not have systems that allow you to access the information ATO requires.
Finally, for invoices that include both labour and materials, there has to be a report of the total payment.
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