Couriers and cleaners to report contractor payments

The government will extend the taxable payments reporting system to contractors in the courier and cleaning industries, with effect from 1 July 2018.

These changes were recommended in the Black Economy Taskforce that was released on Budget night. The expansion of this reporting system follows its successful implementation in the building and construction industry.

From 1 July 2018, all entities predominately in the courier or cleaning industry will need to report the following to the Australian Taxation Office. A list of each contractor and their ABN, name, address, the gross amount paid to them in the financial year (including GST), and the total GST included (if any) in the gross amount paid.

Risk mitigation steps

This amount of reporting brings payments to contractors into line with the reporting of salary and wages paid to employees in these industries.

An intention of this type of policy is to ensure the industry at large is doing the right thing and paying workers appropriately. Whether an individual providing services on behalf of a principal as an employee or a contractor is a question of fact based on substance over form.

While there are legislative tests that require application to determine this issue, they mostly seek to capture the essence of the common law that has developed over time in relation to this issue. CCH iKnow has a wonderful chapter devoted to the question of Contractor versus Employee which will assist you in making the right decision based on the individual circumstances of each case.

Implementation process

The legislation states that the payments are required to be reported every quarter, however, it is expected that the Commissioner of Taxation will allow an annual report to be lodged by the businesses in these industries, consistent with the requirements for the building and construction industry.

It is important to note that there will be no need to report payments made for private and domestic purposes. This expansion of the taxable payments reporting system will be applicable to businesses whose primary industry is in the courier and cleaning industries. The policy intention is to improve compliance of both the businesses and the contractors in these industries.