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The contractor reporting requirements apply if you:
From July 2018 businesses providing cleaning, courier, road freight, information technology and security investigation or surveillance services may also be required to lodge a TPAR.
You are ‘primarily’ in the building and construction industry if you earned more than 50 per cent of your income from ‘building and construction services’ in the current or previous financial year. This means that builders, developers, kitchen and bathroom and cabinet making businesses are required to report. In most instances businesses like hardware and department stores that may occasionally arrange for the supply and installation of certain products will be excluded.
Payments made to contractors for building and construction services need to be reported.
Building and construction services include the following activities performed on, or in relation to, any part of a building, structure, works, surface or sub-surface:
You will also need to remember to report payments made to suppliers in situations where you are paying for more than just a product. For example, if you hire an excavator with an operator you will have to report the payment made to the hire company.
If you are only purchasing goods then no reporting is required. However, if you are invoiced for goods and services, you should report the total amount of the payment unless the services are merely incidental.
Kevin purchases a stock of new taps from Harry's Hardware to install in a commercial building. Harry installs one tap by way of demonstration so that Kevin knows how to install the rest. Harry's Hardware invoices Kevin for the taps and includes a small amount for the labour to demonstrate the installation. Kevin does not need to report the payment he makes to Harry's Hardware because the labour component of installing the tap is incidental to the supply of the materials.
An electrical business provides labour and materials for various electrical applications. A builder pays the electrical business for the supply and installation of wiring in a commercial fit-out that he is managing. As the provision of the installation service is a building and construction activity and more than incidental to the supply of materials, the builder will be required to report the total payment made to the electrical business. The builder is carrying on a business that is primarily in the building and construction industry.
Owner-builders and other individuals who are building or renovating their own homes and are making payments to contractors for building and construction services are not required to report.
For each contractor, you are required to report the following information each financial year:
You are only required to report payments in the financial year in which the payment is made.
Therefore, to make complying with these new requirements as easy as possible it will be important to ensure your record-keeping practices gather the above information for each contractor you engage.
You will need to complete a Taxable Payments Annual Report form. You are required to lodge a report by 28 August each year.
The report can be completed online provided you have an AUSkey or MyGov account and your accounting software can produce a report which meets ATO specifications. Alternatively, you can order a paper form online or by calling the ATO on 13 28 66.
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