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Saturday 1 June 2013

Building and construction industry - A letter from the Tax Office

From May 20, 2013, the Tax Office will be writing to businesses in the building and construction industry (BCI) to provide information about lodging the 'Taxable payments annual report'.
The letter from the Tax Office may include:
  • Information on when and how to lodge the first report;
  • A paper copy of the annual report form; and
  • Information about the Tax Office's Youtube video on how to lodge the report online. 
The requirement for businesses in the BCI to disclose amounts paid to contractors and sub-contractors together with each contractor's Australian Business Number (ABN) was recently introduced and takes effect from July 1, 2012.
Businesses which have previously reported a business industry code indicating they were operating in the BCI or claimed contractor expenses at the relevant tax return label will be receiving this letter from the Tax Office.
The Tax Office will also be emailing a list of clients who may have an obligation to lodge the report to tax agents. Tax agents will also be made aware that the list is not comprehensive and all possible clients operating in the BCI have an obligation to lodge their report.
The 'Taxable payments annual report' is due by:
  • July 21 each year with the exception of businesses with quarterly activity statements, which can lodge the report by July 28, 2013 in the first year; or
  • August 25, 2013 if it is prepared by a tax agent. This concession lodgment arrangement is available for the 2012/13 year only 
Further assistance currently provided by the Tax Office in this area includes:
  • Webinars;
  • Phone assistance visits; and
  • Advertising.
For more information, click here.

Common BAS errors

Businesses that are registered or required to be registered for Goods and Services Tax [GST] and PAYG Withholding need to prepare Business Activity Statements (BAS) periodically to report and pay a number of their tax obligations.
Activity statements are personalised to each business and any options which they may have chosen at the time of registration. Items which taxpayers may need to disclose include:
  • GST;
  • PAYG Instalments;
  • PAYG Withholding;
  • Fringe benefits tax; and
  • Luxury car tax
The Tax Office has published a list of common errors made by businesses when submitting their BAS and provided explanations on how to rectify these errors.
Some of the common mistakes frequently made include:
Including wages and superannuation contributions as purchases at label G11.
Wages should be reported at W1. Superannuation contributions do not need to be disclosed.
Including dollars and cents.
Only whole dollars need to be shown on the BAS. Avoid cents, decimals, commas, symbols or words.
Not including the sale of a business.
The sale price of a business, including any GST, must be reported at G1. When it is a GST-free sale of a going concern, the amounts still need to be disclosed at G3. If it is taxable, include GST at 1A.
Claiming GST credits for purchases used for private purposes.
GST can only be claimed for business expenses. If a purchase was used for both business and private purposes, GST credits need to be apportioned.
Leaving the variation code unexplained.
When varying a GST or PAYG instalment amount, a reason for the variation must be disclosed at G24 (for GST) or T4 (for PAYG).

The Tax Office has also released a 2 minute video on how to avoid these common mistakes when completing your BAS. Click here to access the video.

Click here to access the full list of common BAS errors.