Contractors reminded to declare $172 billion of income
The Australian Taxation Office (ATO) has revealed it is using data from its Taxable Payments Reporting System (TPRS) to ensure that more than $172 billion of payments to contractors have been properly declared.
Businesses that pay contractors in the courier, cleaning, building and construction, road freight, information technology, security, investigation, or surveillance services industries are required to notify the ATO of payments made to contractors annually.
ATO Assistant Commissioner Peter Holt said because of TPRS, the ATO now has a clearer view than ever before of payments made to contractors in these industries.
“More than 158,000 businesses have now reported all payments made to contractors in the 2019–20 year to us. This data, combined with our sophisticated data and analytics capability, means our field of vision to detect unreported income is better than ever.”
The ATO is using the data to proactively contact contractors to make sure they haven’t forgotten to declare the income reported through the TPRS.
“Where we discover a discrepancy, our first step is always to contact the taxpayer or their tax professional to check they have fully reported these payments in their tax return,” Mr Holt said.
The ATO encourages taxpayers who have not declared or under-declared income from contract work to lodge an amendment request or speak to their registered tax professional for assistance.
The ATO is also using the TPRS data to draw attention to income from contracting work so that it can be easily added to tax returns at tax time. Information reported through TPRS also allows the ATO to check that businesses are registered for GST if required and are using valid Australian Business Numbers.
Deliberately not reporting or under-reporting business income to the ATO contributes to the shadow economy. The ATO estimates that small businesses operating in the shadow economy costs the community more than $6.7 billion in unpaid tax every year.
“Honest courier drivers do the right thing: they pay their rego, pay their road tolls, stick to the speed limit, and pay their taxes. It’s not fair that some dishonest drivers get to skip the ‘toll booth’ and get an advantage over their honest competitors.”
The ATO encourages the community to report suspected tax evasion by:
- completing a Tip-Off form on our website at ato.gov.au/tipoff or in the ATO app (which is available from the App store)
- phoning the ATO Tip-off hotline on 1800 060 062.
John drives a delivery truck on weekends as a contractor for a courier company, delivering garden supplies. He earned $40,000 in the 2019–20 financial year. John also works from Monday to Friday as a driver, as an employee truck driver, from which he earned $80,000. When he lodged his tax return, he only declared his salary and wages, and did not declare the payments received as a contractor courier driver.
A few months later, the ATO received a Taxable Payment Annual Report from the courier company that contracted John, reporting the $40,000 in income. We cross-matched the TPRS data with John’s tax return and noticed there was no business income declared. We then sent John a letter asking him about the discrepancy and reminding him that he will need to declare the income. John lodged an amendment and paid the difference in tax owed.
Notes to journalists
The Australian Taxation Office (ATO) has revealed it is using data from its Taxable Payments Reporting System (TPRS) to ensure that more than $172 billion of payments to contractors have been properly declared.Last modified: 31 Mar 2021QC 65187
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