The Australian Taxation Office (ATO) is reminding businesses who are required to lodge a taxable payments annual report (TPAR) to do so by 28 August.
Businesses in the construction industry as well as cleaning, courier and road freight, information technology and security, investigation or surveillance service businesses and have paid contractors in relation to these services are required to lodge a TPAR.
ATO Assistant Commissioner Tony Goding said that the taxable payment reporting system helps 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 underreporting income makes it unfair for honest businesses,” Goding said. “It may also be seen as a red flag and could prompt closer scrutiny from the ATO.
“The taxable payments reporting system is just one tool in the ATO’s toolbelt helping expose missing income and keeping things fair for businesses doing the right thing,” Goding added. “We use 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.”
The ATO reported that $400 billion in payments were made to almost 1.1 million contractors in taxable payment reporting system in the last financial year.
The office also 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 was approximately $1110.
“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,” Goding commented. “We know there are some who deliberately don’t report or under-report their income, making it unfair for honest businesses.”
It is reported that the shadow economy is estimated to cost the Australian economy $12.4 billion every year in unpaid taxes.
“Dodgy businesses doing ‘cashies’ are being put on notice as the ATO continues to crack down on shadow economy behaviour,” Goding said. “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.
“Every dollar of tax dodged is a dollar that can’t be used for vital services like health and aged care. The TPAR program helps to prevent billions of dollars being lost to the shadow economy,” he concluded.