From 1st July 2012, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year. The ATO wants this in the form of a taxable payments annual report.

The aim is to improve compliance with tax obligations and to change the practices of those contractors who are not doing the right thing.

Your business needs to report if you:

  • are in the building and construction industry
  • make payments to contractors for building and construction services, and
  • have an Australian Business Number (ABN).

You are considered to be part of the building and construction industry if:

  • 50% or more of your business activities in the current financial year relates to building and construction services.
  • 50% or more of your business income in the current financial year is derived from providing building and construction services.
  • 50% or more of your business income in the past financial year is derived from providing building and construction services.

The details to report will generally be contained in the invoices you receive from your contractors.

The first annual report is due 21 July 2013 for payments made in the 2012–13 financial year. In this first year businesses that lodge their business activity statements quarterly may lodge by 28 July 2013.

The information reported about payments made to contractors will be matched against other information held by the ATO to detect contractors who have not:

  • lodged tax returns, or
  • included all their income in returns that have been lodged.

Building and construction services include any of the activities listed below if they are performed on, or in relation to, any part of a building, structure, works, surface or sub-surface:

  • Alteration
  • Assembly
  • Construction
  • Demolition
  • Design
  • Destruction
  • Dismantling
  • Erection
  • Excavation
  • Finishing Improvement
  • Installation
  • Maintenance
  • Management of building and construction services
  • Modification
  • Organisation of building and construction services
  • Removal
  • Repair
  • Site preparation

Do not report

  • Payments for materials only, such as building supplies and materials.
  • Unpaid invoices as at 30 June each year. For example, if you receive an invoice in June 2012, but you do not pay that invoice until July 2012, you report that payment in the 2012-13 Taxable payments annual report.
  • Pay as you go withholding payments.

For more information about taxable payments reporting visit

ato.gov.au/taxablepaymentsreporting to find details such as:

  • A list of activities and occupations that are considered to be building and construction services.
  • Examples of situations where reporting is required.
  • Exclusions from reporting requirements.
  • How to register to participate in an online seminar from your home or business.

This article is provided by MYOB in their “newsCAP” issue 7 dated 9th Aug 2012.

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