The Tax Office is introducing new reporting requirements for tradesmen and businesses in the Building and Construction industry commencing 1 July 2012. Those tradesmen/businesses that pay subcontractors will now have to report the following to the Tax Office:
– Identity of who they have paid
– How much they have paid to that contractor
– ABN and address of the contractor
That needs to be reported to the Tax Office by 21 July each year i.e 3 weeks after the end of the financial year – not much time.
Now the Tax Office are being open as to why they are introducing this new reporting regime and that is to catch people out who are doing cash jobs and not declaring the income on their tax returns and BAS’s. There are other significant hidden traps however as a result of the new contractor reporting system that could bring you to the ATO’s attention. Consider the following:
– The ATO tell you that you have not declared all of your income, adjust your income up, tax you on the new higher amount, and fine you as well
– The ATO tell you that your “sub-contractors” are actually “employees” and that you haven’t paid your employees superannuation for the past 5 years, they demand you pay it, and fine you as well
– The extra outgoings of cash as a result of the above causes you to almost go to the wall and you wonder how you could have done things differently so as to not come under the ATO’s spotlight
If you want to know more or need some business strategies put in place to keep you off the ATO’s radar call Tate at Boston Accounting today. We have extensive knowledge of the building industry and a proven track record of freeing up cash flow for our clients.
