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  • Payments you don't need to report

    There are specific payments you don’t report on the Taxable payments annual report.

    On this page:

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    Payments for materials only

    You're not required to report payments if the invoices are for materials only, such as building supplies and materials.

    However, if you pay a contractor for invoices for both materials and labour and other times pay the same contractor for materials only, if you're unable to easily separate payments made for materials only without significant administrative effort, you can report all the payments you make to this contractor.

    Unpaid invoices as at 30 June each year

    You don't report on invoices unless they have been paid on or before 30 June each year. For example, if you receive an invoice in June but you do not pay that invoice until sometime in July, you will report that payment in the financial year you paid it.

    Pay as you go (PAYG) withholding payments

    You don't report PAYG withholding payments. You should report these in a PAYG withholding annual report. Examples include payments to:

    • employees
    • workers engaged under a voluntary agreement to withhold
    • workers engaged under a labour-hire or on-hire arrangement. This includes a labour hire firm that hires workers under a labour-hire arrangement to provide building and construction services.
    • foreign residents for work performed in Australia. These payments are generally subject to PAYG foreign resident withholding. If the payments are not subject to PAYG withholding then you need to report them in the Taxable payments annual report.
    • foreign residents for work performed overseas
    • contractors who do not quote an ABN. If amounts are withheld because a contractor didn't quote an ABN, you can choose to report the details in the Taxable payments annual report instead of reporting them separately in the PAYG withholding where ABN not quoted – annual report. If you make this choice, only report the information in one report. If an ABN isn't provided, you must withhold under the existing pay as you go withholding arrangements.

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    Payments for private and domestic projects

    You don't need to report if you are a:

    • homeowner making payments to contractors for building and construction services – for example, if you are building or renovating your own home
    • business in the building and construction industry and you make payments to contractors for building and construction services for private purposes – for example, if you are building or renovating your own home.

    If the work is in relation to carrying on a business, the amounts paid to the contractors for this work need to be reported. These are payments for which the business can claim a tax deduction (for example, payments to contractors).

    Example: Homeowner paying for building and construction services

    Kristyn, who has an ABN for the purposes of running a bookkeeping business, manages the construction of her new home and makes payments directly to the contractors. Kristyn won't be required to report payments she makes to contractors because she is undertaking the activity in a domestic capacity, not as a business.

    John is a builder and runs SF Builders as a sole trader. He is currently doing renovations on his own house and has engaged ML Carpets to handle the installation of new carpet. As this renovation is private and not part of John’s or SF Builders’ business, the payments he makes to ML Carpets are not reportable.

    Example: Land owner paying a project manager

    Maya owns land and has engaged a project manager George to manage the development of a building on her land.

    Maya's business activity is purchasing and selling property. Maya is not carrying on a business primarily in the in the building and construction industry, and not required to report payments she makes to George.

    Example: Payments to property managers

    Jim only purchases properties for rental purposes and engages a property manager. Jim is not required to report the payments he makes to the property manager because he is not considered to be carrying on a business that is primarily in the building and construction industry.

    Susan is a property manager and pays a plumber to fix a burst water pipe on a property. Property manager’s business activity is managing investments, they aren't considered to be a business that is primarily in the building and construction industry. As a result, Susan doesn't need to report the payments made to the plumber.

    However, if Susan creates a separate entity to manage the building maintenance of the property, this entity will need to report the payments to the plumber – this is because the separate entity is considered to be primarily in the building and construction industry.

    End of example

    Payments within consolidated groups

    If you're in a consolidated group or multiple entry consolidated group for income tax purposes, you don't need to report payments you make to another member of that same group. This is because members of a consolidated or multiple entry consolidated group are effectively taxed as a single entity.

    However, each entity of the consolidated group is required to consider whether they are conducting a business that is primarily in the building and construction industry and report payments they make for building and construction services outside of the consolidated group. The consolidated group provisions don't apply to the taxable payments reporting system.

    Example

    Brick Co and Paint Co are both members of the same consolidated group for income tax purposes. Brick Co provides building services and makes a payment to Paint Co for painting its building project. Because Paint Co and Brick Co are in the same consolidated group, Brick Co won't have to report on the payment made to Paint Co for the provision of painting services. However, Brick Co will have to report on payments made to entities outside the consolidated group for the supply of building and construction services.

    End of example

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    Last modified: 30 Mar 2017QC 51600