Getting your taxable payments reporting ready for tax time
Are you ready to prepare and lodge your first Taxable Payments Annual Report (TPAR) before 21 July 2014?
With the ATO closely reviewing contractor payments, taking extra care to supply accurate, detailed contractor records and keeping it that way is more important than ever.
To help give you peace of mind that you are meeting your compliance obligations, ask these questions when preparing your business’s TPAR:
Are my contractor records current?
As the ATO is using data matching to detect contractors who have not lodged tax returns or included all their income on tax returns that have been lodged, keeping accurate records is more critical than ever. Ensure that details are up to date and checked regularly (for example every 12 months).
Taxable Payments Annual Reports (TPARs) were introduced to improve taxation compliance among contractors who weren’t doing the right thing. They cover total payments made to each contractor for building and construction services across the financial year. You need to report the contractor’s ABN (if they have one), name and address, the total amount paid for the year and the total GST included in that amount.
Am I keeping detailed contractor records?
If you are using an accounting solution such as MYOB AccountRight to complete your TPAR, keeping and maintaining accurate records and being compliant is extremely straightforward and should only take a matter of minutes, not days. Regardless of which method you use, it’s worthwhile storing more than the minimum requirements from the ATO, such as name and address – and including contractors’ phone numbers as well. If and when your business’s contractor data is crosschecked by the ATO, you can avoid receiving a phone call from the ATO.
Are my contractors’ ABNs current and accurate?
Most contractors will have an Australian Business Number. Each time you employ a contractor, ensure you check their ABN is current and accurate.
Am I on top of my ABN withholding tax requirements?
If you employ a contractor without an ABN, and the total payment for the goods or services is more than $75 excluding any GST, it is a legal requirement to withhold 46.5% of the payment and pay it to the ATO. This figure is the top marginal rate plus the Medicare levy. You will also need to be registered for withholding under the PAYG withholding system, give the contractor an original and a copy of a payment summary, and keep a copy of the payment summary to help prepare your annual report for PAYG withholding where no ABN is quoted. Also ensure you keep records on transactions in which you withheld 46.5% separate from other payment records.
Am I confident about completing my TPAR?
Compliance can be both complex and time consuming. If you need peace of mind when you’re completing your TPAR, consider taking a look at some of the resources available from the Australia Taxation Office. The ATO is running monthly webinars about understanding taxable payment reporting which could help simplify your EOFY paperwork. Or check out MYOB’s EOFY page and ask your accountant or bookkeeper for assistance.
Richard Puffe is the MYOB compliance product manager.