If you're in the building and construction industry, you need to be aware of:
- Changes announced in the Federal Budget; and
- The significant amendments proposed in the last fortnight to expand the duty tax base and administration of state taxes in NSW.
You'll also need to:
- Prepare for looming deadlines regarding your Taxable Payments Annual Report (which now comes with penalties for failure to lodge);
- Prepare for Payment Times Reporting Scheme reporting obligations; and
- Ensure adequate processes are in place to ensure the accurate lodgement of these reporting obligations.
TAXABLE PAYMENTS ANNUAL REPORT – PENALTIES IMPOSED
The Taxable Payments Annual Report (TPAR) is a reporting obligation that generally must be lodged by August 28 of each relevant year for taxpayers in certain industries and sectors. Meaning that businesses (including those in the building and construction industry) who make payments to contractors may need to report these payments in a TPAR.
Importantly, from March 23 2022, the ATO has advised that they will apply failure to lodge penalties to taxpayers that aren't compliant with the reporting obligation. Specifically, they have advised that penalties may be imposed in the following situations:
- Taxpayer has not lodged their 2021 or prior year TPAR;
- Taxpayer has already received three non-lodgement letters about their overdue TPAR and has not actioned the outstanding obligation; and
- Taxpayer has not responded to the ATO's follow-up phone call about their overdue TPAR.
What can you do?
The TPAR is an important compliance program for the ATO, as it enables them to enhance their data matching processes. Given the heightened focus on the TPAR that has been recently announced, we recommend you or your clients ensure that any historic returns are lodged as soon as possible and that procedures are in place to ensure lodgement of this year's return by the August deadlines.
Payment Times Reporting Scheme
The Payment Times Reporting Scheme (PTRS), and associated compliance and reporting obligations, continue to be an area of concern for clients. These concerns include whether they need to report for it and, if so, lack of processes and clarity on how to gather the data and prepare/lodge the report.
Below, we explore more about the PTRS.
The PTRS does not only apply to clients in the construction and infrastructure industry - it applies to all industries depending on turnover.
what is the PTRS and its objectives?
The PTRS requires businesses (including government enterprises) that meet the threshold criteria to report on their payment terms and practices for small business suppliers.
Its objectives include:
- Improving payment receipts for small businesses by creating greater transparency regarding the practices of larger business entities;
- Creating incentives for improved payment times (and flow-on benefits to small businesses and the Australian economy); and
Enabling small businesses to make more informed decisions about their potential clients and transactions.
more about the reports
A PTRS will be required to be lodged for each six months period of the relevant income year. Generally, these periods will be based on the income/financial year used for income tax purposes. The reports are generally required to be lodged within three months of the end of each six-monthly reporting period. As such, for a lot of clients, the next report was likely to have been due on March 31 2022. This would relate to transactions for the period July 1 2021, to December 31 2021.
The reports will be published on a central public register known as the Payment Times Reports Register.
who does it generally apply to?
A PTRS applies to:
Large businesses with a total annual income of over $100 million. Note: Government enterprises are not excluded from this; and
Members of a corporate group who have a total income of at least $10 million where the combined total income of the group is greater than $100 million.
consequences of non-compliance
Providing false/misleading information can lead to penalties up to 0.6% of the total income for the income year in which the contravention occurred (i.e. these are quite significant). Failure to keep records of the information used to prepare Payment Times Reports can also lead to penalties up to 0.2% of the total income.
Compliance audits may be undertaken by the Regulator where there is reasonable suspicion of a contravention of the legislation.
It's important that you understand your obligations for your Taxable Payments Annual Report and the Payment Times Reporting Scheme.
Given that we are now into the second year of this compliance obligation, there is an expectation from the Regulator that taxpayers are adequately resourced and technologically enabled to complete these reports in an accurate manner.
get in touch with us!
McInnes Wilson Lawyers' Taxation and Revenue team have extensive experience assisting their clients in matters such as these. Some of the ways we can help include:
- Technical/legal advice on how the PTRS provisions impact you (e.g. do you qualify as a reporting entity, etc) and whether there is a requirement to report;
- Where you have a complex organisational structure, advice regarding which entities may be required to report under the rules;
- Practical advice regarding what information and parameters are required to be reported;
- Assessing your current operational, data and system capabilities for complying with the PTRS provisions, and provide recommendations for managing complexities, limitations or missing inputs;
- Assisting with lodgements and integrity of the data being reported; and
- Reviewing your last year's PTRS returns for accuracy and assistance with any process improvements that may be required.
If you require any assistance or more information on the above topics, please fill out the enquiry form below to receive an obligation-free appointment.