What you need to know about Taxable Payments Reporting for the Building & Construction Industry

 Key Date: Reports must be lodged by 21/07/2013

On July 21st, business in the building and construction industry will have to submit their first taxable payments annual report to the ATO. The report outlines how much these businesses pay to contractors for building and construction services in the 2012-2013 financial year.

The aim is to improve tax obligation compliance by contractors who aren't currently doing the right thing. As with any new tax legislation, it's important for businesses to check they're keeping the correct records. If this change does apply to you and you haven't been been recording payments from 1st July 2012 onwards you are going to face a lot of work in the July period.

Anyone still using paper or spreadsheets, which don't allow easy flagging of contractor payments may struggle with their EOFY activity. It is a good idea for small business owners who pay building and construction contractors to record these contractor payments straight away with up to date accounting software.

The report must include the following details for each contractor:

  • ABN
  • Name and Address
  • Total Gross Amount Paid
  • Total GST included

You need to make sure your business is consistently recording these important details.

How do I know if I need to submit a
Taxable Payments Report?

Businesses need to submit a taxable payments annual report if they:

 - Are in the building and construction  industry
 - Make payments to contractors for building and construction services
 - Have an Australian Business number (ABN)



The ATO considers you part of the building and construction industry if:

- 50% or more of your business activities in the current financial year relates to building and construction services

-50% or more of your business income in the current financial year is derived from providing building and construction services

-In the financial year immediately before the current financial year, 50% or more of your business income was derived from providing building and construction services.

Superannuation Guarantee Rate Increase

As of the 1st of July 2013, all Australian employers will have to:

• Increase the amount they are paying into their employee's superannuation fund from 9% to 9.25%.

• Start paying superannuation contributions for any employees 70 years or over as the upper age limit for superannuation has been removed.

The Superannuation Guarantee (SG) rate will increase to 9.25% as of the 1st of July, and will increase by another 0.25% from 1st July 2014. Annually, it will increase by 0.5% until 2019/2020, taking the SG rate to 12%.

This is all part of Australia's compulsory superannuation savings system, which has been in place since 1992 and is designed to increase the future retirement incomes of  Australian workers.The challenge will be to ensure an adequate retirement income for our ageing population and to reduce reliance on the Age Pension system. The number of Australians aged over 65 is projected to grow from 3 million to 8.1 million by 2050. The ratio of working age Australians to those over age 65 will decrease for 5-to-1 to just 2.7-to-1 over the next 40 years.


Superannuation Guarantee Administrative Load Lightens

The government has established what they have called a 'Small Business Superannuation Clearing House', which will help to lighten the administrative load for Small to Medium Enterprises who have to pay their employees' compulsory Superannuation Guarantee payments.

Employers with less than 19 employees can utilise a free online service to make a single secure payment to the Clearing House for all their employees.

Employers just need to register all their employees' details and the Clearing House will distribute the superannuation to the different employees' accounts.

All the details on how to register are on the Department of Human services Website but here are a few of the requirements.

  • A one off registration
  • A valid email address and ABN
  • Employee's Superannuation Guarantee, additional employee and employer contributions
  • Payments can be made via EFT or BPAY
  • Payments must reach the Clearing House by the Superannuation Guarantee cut-off date to meet the employer obligations

Once the contribution is accepted by the Clearing House, the employer has met their Superannuation Guarantee employer obligations, thereby minimising the time and paperwork involved.

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