According to the Tax Office, where there are discrepancies between the payment information reported by businesses and contractors, it will issue letters to contractors to seek rectification of the discrepancy. Where necessary, it will also amend tax returns of the contractors, or in cases of non-lodgment of tax returns, it will issue assessments based on the information it holds and impose penalties.
Some concerns have been raised about potential problems that might arise with information received by the ATO under the new reporting system being different from data matching exercises such as the building and construction industry data matching program announced in February 2012.
The ATO said the information that will be reported under taxable reporting payments has not been previously collected, therefore not data matched. The building industry data-matching program includes collecting data on individuals and businesses holding a hardware store trade account with annual purchases of $10,000 or more and is being run as a pilot program.
The ATO will also be given data on complaints and licensing information from NSW Fair Trading, Queensland Building Services Authority and Government of South Australia Consumer and Business Services.
Under the taxable reporting payments system, payers will generally not have to verify the Australian Business Number (ABN) provided to them by contractors. The ATO says that generally, proof of identity is not required. However, payers can verify ABNs if they wish by using tools available on the ABN Lookup web site.
This new reporting regime will impose another compliance burden on what many would rightly claim is a struggling industry. However, the fact that the information required is expected to be generally included on invoices received by the business might lessen the compliance cost. Although July 1, 2013 is still almost a year away, business affected should be preparing now to be able to provide the information required.
Terry Hayes is the Editor-in-Chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.
Terry Hayes is the editor-in-chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.
