Businesses such as restaurants and cafés that moved to a delivery service model in response to COVID-19 restrictions have been urged to confirm if they fall into the taxable payments reporting system this year.
ATO assistant commissioner Peter Holt said ongoing coronavirus restrictions have seen businesses pivot and contract out more services, potentially capturing these businesses under the taxable payments reporting system (TPRS) for the first time.
The TPRS currently applies to businesses in the building and construction industry, those who provide cleaning or courier services, and those who provide road freight, information technology (IT), and security, investigation or surveillance services.
Businesses that provide mixed services — a mixture of any the TPRS services — and receive payments for these services that exceed 10 per cent or more of their total GST turnover will also need to lodge a taxable payments annual report (TPAR) by 28 August.
“Many restaurants, cafés, grocery stores, pharmacies and retailers have started paying contractors this year to deliver their goods to customers as a result of COVID-19,” Mr Holt said.
“These businesses may not have previously needed to lodge a TPAR. However, if the total payments received for these deliveries or courier services are 10 per cent or more of the total annual business income, you’ll need to lodge.”
This is the first year that businesses that pay contractors to provide road freight, IT, security, investigation or surveillance services may need to lodge a TPAR with the ATO.
The ATO expects more than 280,000 businesses to complete a TPAR for 19–20, with more than 16,000 businesses having already lodged a TPAR or informed the ATO that they are not required to lodge as of late July.
Despite the ATO reaching out to practitioners with lists of clients who may potentially have TPAR obligations, CPA Australia has warned that these lists may not be definitive and that other clients may fall under the TPRS.
Mr Holt said information in the TPAR would shed light on payments to contractors and ensure a level playing field, with its work in the building and construction industry leading to a $56 million reduction in amounts paid to subcontractors without a valid ABN from 2016–2017 to 2018–2019 financial years.
“It is not fair if an honest contractor misses out on business because a competitor is undercutting them by doing things like under-declaring or not declaring income,” Mr Holt said.
“We are also actively encouraging the use of the ABN Lookup tool, which is a quick and easy way to ensure the contractor you are working with is quoting a valid ABN on their invoices.
“Additionally, some commercial software providers have now integrated automated ABN checking into their accounting software packages, which makes ABN checking more streamlined during the year as well as when it comes time to lodge the TPAR.
“This sustained effort has led to a $500 million improvement in reporting of payments to valid ABNs across the building and construction industry.”