New mandatory reporting for the building and construction industry

• From 1 July 2012, businesses involved in the building and construction industry (BCI) will need to lodge an annual report detailing any amounts paid to contractors and sub-contractors together with each contractor’s Australian Business Number (ABN).
  
• The Tax Office is aiming to collect the information to data match transactions to improve tax compliance in the BCI.
  
• Based on results of 2009 contractor audits, 34% of the contractors were from the BCI and 51% of the BCI contractors had either not lodged a tax return or had failed to declare their income fully or partially.
  
• Payments that have to be reported are those which include a service component. The amount to be reported must then include all monies paid to the contractor including any payments for materials and fittings.
  
• For example, Jack is a plumber who has been contracted by a builder to install several toilets in a housing estate. His contract includes payment for his labour as well as parts and fittings used. Jack’s contract would be a reportable supply as it’s a supply of a service in the BCI. The whole of the payments would need to be reported to the Tax Office by the builder.
  
• Reporting businesses include all entities, including sole traders, working wholly or principally in the BCI. If the contracting party is not in the BCI, that party will not need to report to the Tax Office.