The Black Economy (also known as ‘Cash’ Economy) in Australia is a complex and growing economic and social problem. The Australian Bureau of Statistics estimated that the Black Economy in Australia could be as large as 1.5% of Australia’s GDP, or around $25 billion. In the Government’s fight against the Black Economy, the Minister for Revenue and Financial Services, the Honorable Kelly O’Dwyer established the Black Economy Taskforce (‘the Taskforce’).
The Taskforce has released its Interim Report which made a number of recommendations. One of these recommendations was to extend the Taxable Payments Reporting System (‘TPRS’) to include two high-risk sectors, cleaners and couriers, from 1 July 2018. This recommendation was based on the TPRS already having improved tax compliance in the building and construction industry. Under the TPRS, businesses are required to report payments they make to contractors (i.e., both individual payments and total payments for the income year) to the ATO each year using the Taxable Payments Annual Report.
Definition of ‘Cleaning Services’ and ‘Couriers Services’ for the purposes of the new reporting rules
Cleaning Services is a very broad concept as it covers the cleaning of most types of things. In this regard, it refers to any service where a structure, vehicle, place, surface, industrial machinery or equipment has been subject to a process in which dirt or similar material has been removed from it. Some examples of a cleaning service include office cleaning, road sweeping or street cleaning, swimming pool cleaning, park and facilities cleaning, or event cleaning.
Couriers Service is intended to include any service where an entity collects ‘goods’ from, and delivers them to, another place. The Australian Taxation Office (ATO) makes it clear that collection and delivery must be within Australia. Goods may include parcels, packages, letters, food, flowers or any other goods, and they may be transported by a number of different means, including by car, truck, van, motorcycle, motorized scooter, bicycle, on foot, or other means of transportation.
What information must be reported to the ATO?
The details to be reported for each contractor (i.e. payee) using the TPRS include the following:
- The payee’s Australian Business Number (ABN), where known;
- The payee’s name, address and contact number;
- The ‘Gross amount paid’ (i.e., including GST) and the ‘Total GST’ for the income year.
Please note that the Taxable Payments Annual Report is due by 28 August each year. Penalties may apply for not lodging your annual report by the due date.
If you would like any further information on how to prepare Taxable Payments Annual Report, please do not hesitate to contact our accountants at The Quinn Group on (02) 9223 9166 or fill out an online enquiry form today.