Reporting Contractor Payments in the Contruction Industry

Starting June 2012 businesses in the construction industry will now have to report their contractor payments. The ATO says this will include payments to:

  • contractor payments
  • subcontractor payments
  • payments to workers who quote an ABN

The ATO wants details of all participants in the industry. Why so? They believe that many payments to contractors are not being reported in their tax returns, so if a builder is required to declare these payments (presumably to secure a tax deduction) then they can cross check whether:

  • the income is being declared and tax returns lodged
  • GST is properly paid
  • the contractors are working for only one person (i.e. are they employees?)
  • there are Centrelink issues (i.e. income not declared)
  • the contractors and operating in the cash economy
  • they can get a picture of how the industry works

In their audit activity they routinely find non-compliance with the tax laws in this industry. Now they are trying to fight back. If you are affected, get in touch with us today to discuss the best way to deal with the new rules and manage your risk.

Author: lucentor

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