• Anti-avoidance

Extension of the Taxable Payments Reporting System

In an effort to strike a further blow to the cash economy, the Government has extended the Taxable Payments Reporting System (TPRS) to the cleaning and courier industries. The measures will be introduced from 1 July 2018.

The TPRS currently covers the building and construction industry only. Businesses in the building and construction industry are required to record and report payments made to each separate contractor throughout the year.

The system acts as a tax integrity measure to ensure payments made to contractors are reported to the ATO in a similar manner to salary and wages payments to employees. This greatly increases the ATO’s ability to use data matching to track payments being received by contractors in the industry.

The Budget measure widens the reporting regime to cover the predominantly contractor-based cleaning and courier industries. This extension is off the back of the reported improvement to contractor compliance that resulted from the introduction of the TPRS in the building and construction industries. The first report under the extended regime will be due for lodgement in August 2019.

BDO Comment

Despite the Government’s increased integrity measures, the cash economy remains a challenging adversary to tame. The success of the TPRS in the building and construction industries will be difficult to mirror in the higher volume cleaning and courier industries. The focus on business to contractor payments may yield some results at the cost of significantly increased compliance costs to businesses. However the black economy of cash payments for private expenditure will continue to remain unreported and untaxed.