It is proposed that from 1 July 2018, Cleaning Contractors and Couriers will be required to participate in the Taxable Payments Reporting System. Currently those in the building and Construction Industry are required to report payments made to contractors for related services, and this will be extended to services relating to cleaning and couriers. This is part of the Black Economy Taskforce. The black Economy In Australia has been suggested to be as large as 1.5% of Australia’s GDP or around $25 Billion.
Who Needs to Report
An entity (which includes sole traders, partnerships, companies and trusts) that has an ABN and provides consideration (monetary and non-cash benefits) to another entity for a supply that is wholly or partly for cleaning/courier/building/construction services, will need to complete the report in relation to these payments.
What is a Cleaning Service
The definition of Cleaning Services is very broad and is suggested to include 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 and includes services in relation to a building or residence. Example of included services are;
What Do I need to Report
The details to be reported for each contractor (payee) include;
The Payee’s ABN (if unknown the payer should be withholding tax)
The Payee’s Name and Address
The Gross Amount Paid (including GST) for the income year.
The ATO may required additional information such as contractor’s phone number, email, bank account details (where paid by EFT).
What Payments are Included
Generally the information to be reported to the ATO can be obtained from invoices issued by the contractors engaged. It is important to note that if an invoice from a contractor includes both labour and materials, whether itemised or combined, the total payment must be reported.
Payments are to be reported on a cash basis. This means any unpaid invoices at year end should NOT be included in the annual report for that year.
Certain payments that are not required to be reported include;
Payment for materials only (if the invoice is only for materials – refer above)
Payments subject to PAYG Withholding Payments
Payments within the same tax consolidated of multiple entity consolidated group
When Do I Report
The first annual report will be due in respect of the 2019 income year, and will be due by 31 July 2019 however the ATO has advised in a Draft Guide that it will extend this to 28 August 2019 in line with the Building & Construction Industry. It will need to report in respect of all payments made in the 2019 income year, even where they relate to services provided in the previous year.
Where Can I Find More Information
At the moment, the law to enact the above to Cleaners and Contracts has not yet been enacted in Parliament, however as a good guide in the interim the ATO’s Website regarding TPARS for the Building and Construction Industry is a good guide.
Who Can Help Me with the Reports?
Your book-keeper is well placed to assist you with these reports and will be a more cost effective option than us. However we are happy to help you also if needed.
Who in the Building and Construction Industry is currently required to report?
Activities and services that are considered to be building and construction are broad. Some examples include;
architectural work (including drafting and design),
decorating (including painting),
landscaping and construction,
project management and surveying.
Flooring (including tiling, carpet laying)
Swimming Pool Installation and Construction