The ATO is reminding businesses who are required to lodge a Taxable payments annual report (TPAR), to do so by August 28.
Businesses in the building and construction industry as well as businesses that provide cleaning, courier and road freight, information technology and security, investigation or surveillance services and have paid contractors in relation to these services, need to lodge a TPAR.
The ATO recently issued more than 16,000 penalties for businesses who didn’t lodge their TPARs for previous years, despite receiving multiple reminders. The average penalty for not lodging is approximately $1,110.
ATO Assistant Commissioner Tony Goding said the Taxable payment reporting system helped maintain a level playing field by ensuring all businesses pay their fair share of tax.
“While most businesses do the right thing, not reporting payments to contractors and deliberately under-reporting income makes it unfair for honest businesses,” Mr Goding said.
“It may also be seen as a red flag and could prompt closer scrutiny from the ATO.”
Around $400 billion in payments made to almost 1.1 million contractors, were reported in the Taxable payment reporting system in the last financial year.
Mr Goding said the ATO used a range of information in the TPAR to check for red flags, like not including income, not lodging tax returns or activity statements, overclaiming GST credits or misusing Australian business numbers.
“It is getting harder for businesses to hide from the ATO, like using cash payments to avoid tax, as the TPAR data gives the ATO the extra puzzle pieces it needs to catch-out dodgy behaviour,” he said.
“We know there are some who deliberately don’t report or under-report their income, making it unfair for honest businesses.
“If you are asking for cash and not declaring it to the ATO, you will receive a ‘please explain’ from the ATO and you will be penalised. It’s not a matter of if, it’s a matter of when.”
The shadow economy is estimated to cost the Australian economy $12.4 billion every year in unpaid taxes.
