New Reporting Requirements for Cleaners & Couriers
Do you run a cleaning or courier business or either as part of your business?
Do you hire external contractors?
If you answered yes to both these questions, you need to be aware of new reporting requirements taking effect from 1 July 2018.
What is the purpose of this extra reporting?
The Taxable Payments Annual Report (TPAR) system acts as a tax integrity measure to ensure payments made to contractors are reported to the Australian Taxation Office (ATO) in a similar manner to salary and wages payments to employees. This greatly increases the ATO’s ability to use data matching to track payments being received by contractors in the industry.
Does your business provide ‘Cleaning’ or ‘Courier’ services to customers?
- Cleaning services include any of the following activities undertaken on building, residence, structure, surface, transport/vehicle, industrial machinery or equipment and for events:
- Park and park facilities cleaning
- Swimming and pool cleaning
- Road sweeping and street cleaning
- Gutter cleaning
- Chimney cleaning
- Carpet cleaning
- Exterior cleaning (except sand blasting or steam cleaning)
- Interior cleaning
- Courier services include:
- Activities where items or goods are collected from and delivered to any place in Australia
- Modes of transport include cars, truck, van, ute, motor cycle, bicycle and even on foot
- Courier services do not include:
- Passenger transport services e.g. buses and taxis
- Transporting of blood, organs or tissue
- Freight transport
If your business provides any of these services to customers and you hire contractors to perform the work, you will be required to report these payments to the ATO
What are contractors?
A contractor can be a sole trader, company, partnership or trust who has an Australian Business Number (ABN) and provides cleaning/courier services to your cleaning/courier business and payment is provided to them upon receipt of a tax invoice.
What information is required to be reported?
The following details are reported to the ATO:
- Entity Name
- Gross amount you paid (inc GST)
- Total GST included in the gross amount paid
The following is not reported:
- Payments for material only invoices
(Note - If labour and materials is included on the same invoice, the total amount is reported).
- Unpaid invoices at 30 June each year
- PAYG withholding payments (as these are reported separately)
- Payments within consolidated groups
When is the report required to be lodged?
The first report is due by 28 August 2019 which covers the period 1 July 2018 to 30 June 2019. It is then required to be lodged each year by the 28 August for the preceding financial year.
Does my accounting software assist with the preparation of this?
Yes, most accounting packages including Xero, MYOB and Reckon all support taxable payments reporting.
However, you may be required to do some initial setup to ensure the relevant data is being correctly captured.
What needs to be done now?
Ensure your software system is setup correctly to handle the reporting requirement. Failure to do so before 1 July 2018, can cause huge administration problems when it comes time to prepare the report.
Contact Marsh & Partners if you are unsure of your business's reporting requirements or require assistance in ensuring your software is setup correctly.
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