Taxable Payments Annual Report

Recently the ATO have been sending correspondence to businesses operating in the building and construction industry advising the business that they haven’t lodged a Taxable Payments Annual Report for the 2014 financial year.

What is a Taxable Payments Annual Report and why do you have to lodge one if you’re in the building and construction industry?

To start with, running a business includes a number of things that need to be completed to remain compliant to all your obligations. Not just tax and GST, but also:

  • insurance
  • licenses
  • employee payments and superannuation
  • local council
  • state authorities
  • etc

A Taxable Payments Annual Report is another one of these obligations that applies to businesses that operate in the building and construction industry.

If this is you, then each year you need to advise the Tax Office of the payments you make to contractors and subcontractors that are also in the building and construction industry.

What does the building and construction industry include?

The Tax Office has defined the building and construction industry to be quite broad, and includes, among the obvious, plumbing, architectural work, cable laying, dredging, elevator installation, land clearing, rendering and swimming pool construction.

So what information should you provide?

Specifically you need to advise the Tax Office the name, address and ABN of the contractors and subcontractors you used during the year, the total amount you paid them and the amount of GST they charged you.

This all needs to be collected into the required form and lodged with the Tax Office before 28 August of each year. Importantly, the amounts reported are on a cash basis, that is, the amount you actually paid your contractor or subcontractor, not the amount you have been invoiced.

The information collected by the Tax Office is then used by them ensuring that the contractors have met their tax obligations, such as including the correct amount of income in their tax return or paying the right amount of GST to the Tax Office.