| Defined building services include: |
| - Architectural (including Drafting and Design) |
- Asphalt and bitumen work |
| - Assembly, installation or erection of pre-fabricated houses |
- Block Laying |
| - Building of room components (eg Kitchens, bathroom, cupboards etc) |
- Bricklaying |
| - Cabinet making (including joinery & offsite fabrications for install) |
- Cable Laying |
| - Communications construction |
- Concrete (incl formwork, pouring & finishing) |
| - Construction and sealing roads |
- Construction management |
| - Decorating |
- Demolition |
| - Distribution line construction |
- Drainage work |
| - Dredging |
- Earthworks |
| - Electrical machinery, heavy, installation (on-site assembly) |
- Electrical work |
| - Electrical construction |
- Elevator and escalator
installation and work |
| - Equipment rental with operator (if there is no operator, - Engineering it is just rental of a good and not a building and construction activity) |
- Erection of frames |
| - Erection of scaffolding |
- Excavation and grading |
| - Fencing |
- Finishing |
| - Flood control system construction |
- Flooring (eg tiling, carpet laying, timber floor etc) |
| - Foundation Work |
- Gas Plumbing |
| - Glass and glazing work |
- Hanging or installing doors |
- Installing of fittings
|
- Installation of hard-wired alarm systems (security, fire, smoke etc) |
| - Installation of hot water systems |
- Installation of pre-fabricated components (e.g. kitchens, bathroom |
| - Installation of pre-fabricated temperature components, laundry components, cupboards, etc) controlled structures |
- Installation of septic tanks |
| - Installation of solar devices (e.g. hot water or electricity connections) |
- Installation of tanks |
| - Installation of window frames |
- Installation of windows |
| - Installation or work on devices for heating and Cooling |
- Insulation work (walls, roofs, windows, etc) |
| - Internet infrastructure construction |
- Irrigation system construction |
| - Land clearing |
- Landscaping construction (including paving and design) |
| - Levelling sites |
- Painting (internal and external surfaces, including roofs) |
| - Pile driving |
- Pipeline construction |
| - Plastering (or other wall and ceiling construction) |
- Plumbing work |
| - Preparation of site |
- Project management |
| - Rendering (or other internal or external surface finishes) |
- Retaining wall construction |
| - River work construction |
- Roofing and guttering |
| - Sewage or stormwater drainage system construction |
- Stonework |
| - Surveying |
- Swimming pool installation |
| - Swimming pool, below ground concrete or fibreglass, construction |
- Tiling (walls, etc) |
| - Timber work |
- Wallpapering |
| - Waterproofing interior and exterior surfaces |
- Weatherboarding |
Examples
- A paint store provides paint to painters as well as an in-house painting service. For a small additional service fee the store will tint the paint to the colour the painter instructs. As the provision of the tinting service is merely incidental to the supply of the paint, the painter will not be required to report the payment it makes to the paint store. (The painter is assumed to be in the building and construction industry.)
1
- An electrical business provides goods and services for various electrical applications. A builder pays the business for the supply and installation of wiring in a commercial fit out that he is managing. As the provision of the installation service is a building and construction activity and more than incidental to the supply of goods, the builder will be required to report the payment it makes to the electrical business. (The builder is assumed to be in the building and construction industry.)
In both these examples the word “incidental” is used which is critical in determining whether the supply of services is reportable or not. (An ICB comment: we are not convinced that making this distinction is critical as, at the end of the day, you are simply reporting payments made. Over reporting would be better than under reporting.) The determining factor is the % of supply of goods compared to the % supply of building services; therefore as the Electricians main supply is services and only a small portion of goods it is reportable, where as the painters main supply is paint and not services and therefore not reportable.
What has to be reported?
It is reported that the ATO is working with industry and software developers to build additional functionality within software to enable reporting on this new requirement. Currently, the new report requires:-
- Contractor's name (that appears on the invoice the contractor provided)
- Contractor's address (if known)
- Total amount paid or credited to the contractor over the income year
- Amount of any goods and services tax (GST)
The ATO have created a sample worksheet to capture the information, this is not the report to be lodged. Available from the ATO site below or ICB link below
It is possible that the purchaser may also need to supply a notice to each supplier of the amount of Income and GST, reported to the ATO under this requirement.
ICB feel that most of this information is already captured in the day to day bookkeeping processes in the accounting file. It just may mean that bookkeepers need to be more diligent in capturing ABN’s for suppliers, flagging those suppliers that are reportable. It will also mean finding a way to report the required information in a way that makes sense and is efficient (software companies please help).
We are aware that it is the intention of the ATO that all reporting be done electronically and that they intend that a reportable report/form and additional features to capture the information required for the report will be built into the accounting software. How this new platform will work is not known at the stage, but watch this space! There is a paper form available from the ATO on request.
WHERE TO NOW and to implement as of 1 July 2012
NOTE: There is no actual report required until after the end of June 2013.
It may be that this report simply becomes part of the Income Tax Return lodgement cycle (but I doubt it). I think it is likely to become a quarterly obligation as soon as the Politicians can cope with the compliance obligation flak.
As from 1 July 2012
All payments to the relevant suppliers have to be tracked so that they can be reported later.
- Maybe it is just an identifier on the suppliers records (which could be done later)
- Maybe it is setting up a different expense account and coding the relevant transactions that will need to be reported into that expense account. This may have the advantage of being able to show the business quickly what amounts are being reported and reconcile it to the reports themselves. We have a view on both sides of this, the negative being we don’t always like to change the way expenses are being reported just to meet a compliance obligation.
A concern is how we are going to report the amount of GST per supplier and secondly, how the entire report is to be lodged electronically.
DON’T STRESS yet. We think this should be solved by the software companies.
Who is allowed to do this work?
An unintended consequence of this law is that they have created an obligation on business, that in many cases will be best solved by their external bookkeeper. As this piece of law is part of a “taxation law”, the lodgement of forms, the advice, the helping clients to meet their obligations may only be performed by a Tax Agent. We have already and will continue to lobby government and the ATO to amend their requirements to ensure that BAS Agents are able to provide this service.
Resources
Refer to the ICB “Assessment of a Business for Reportable Payments System”
References:
http://www.ato.gov.au/businesses/content.aspx?menuid=44287&doc=/content/00302736.htm&page=4&H4
http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/00313486.htm&page=1&H1
ICB Team
13 April 2012
ICB Resources:
Reportable Payment System Legislation
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