The 2018 Taxable Payments Annual Report is due for Lodgement with the Tax Office by 28th August 2018.
Businesses in the Building and Construction Industry are required to complete the form and give information including ABN, Name, Gross amounts and GST paid to contractors during the year.
For 2019 Financial Year onwards this is being extended to Courier and Cleaning businesses.
The system was introduced by the Tax Office to target and check on the reporting by contractors of income received and the resulting treatment of GST and also can be a way for the tax office to check that contractors are indeed contractors and not employees.
For businesses that complete their own report we strongly recommend that rather than waiting till year end some of the work can be done as soon as a contractor is engaged to perform work by using a simple website abr.business.gov.au.
This is the ‘ABN lookup’ site and by inputting the contractors ABN you can get the current status of their ABN, whether they are registered for GST and it also shows registered business names. We have had clients subject to an ATO audit that have shown that contractors have supplied them with incorrect/false ABN’s and incorrect GST registration.
The payer is responsible for PAYG withholding tax if an ABN is not supplied. This includes a false ABN.
Also, where a subcontractor has falsely charged GST, the payer is not eligible to claim the GST credits.
So for example, if you pay a subcontractor who has falsely supplied an incorrect ABN and has charged GST even though they are not registered, the payer can be liable to pay back the GST Input credits claimed on a past BAS as well as having to pay an amount equal to 47% of the payment as this is what should have been withheld at the time of payment.
We believe you should check all existing subcontractor registrations at least annually as their situation can change.
For our clients that we produce the Taxable Payments Annual Report, using ABN lookup is part of the process as we have found it is so beneficial in making sure the report is 100% correct.
This article appeared in our July 2018 newsletter and was written by Patricia Glenn.