• Reporting

    Work out if you need to report

    You need to report to us if all of the following apply:

    • you're a business that is primarily in the building and construction industry
    • you make payments to contractors for building and construction services
    • you have an Australian business number (ABN).

    You're considered to be a business that is primarily in the building and construction industry if any of the following apply:

    • in the current financial year, 50% or more of your business income is derived from providing building and construction services
    • in the current financial year, 50% or more of your business activity relates to building and construction services
    • in the financial year immediately before the current financial year, 50% or more of your business income was derived from providing building and construction services.

    Details you need to report

    For each contractor, you need to report the following details each financial year:

    • ABN – if known
    • name
    • address
    • gross amount you paid for the financial year – this is the total amount paid, inclusive of goods and services tax (GST)
    • total GST included in the gross amount you paid.

    You are required to report the payments you make to contractors in the financial year in which the payments are actually made (cash basis).

    The details you need to report are generally contained in the invoices you receive from your contractors.

    See also:

    Keeping records

    It is important to check the way you keep your contractor payment information to make sure you have the details you need to complete the Taxable payments annual report.

    See also:

    Payments you need to report

    You need to report payments you make to contractors for building and construction services.

    The definition of building and construction services is broad – it includes any of the activities listed below if they are performed on, or in relation to, any part of a building, structure, works, surface or sub-surface:

    • alteration
    • assembly
    • construction
    • demolition
    • design
    • destruction
    • dismantling
    • erection
    • excavation
    • finishing
    • improvement
    • installation
    • maintenance
    • management of building and construction services
    • modification
    • organisation of building and construction services
    • removal
    • repair
    • site preparation.

    See also:

    • Appendix 1 for a list of occupations and work activities that qualify as building and construction services
    • Appendix 2 for examples of what we consider to be buildings, structures, works, surfaces or sub-surfaces

    Example 1: Business primarily in the building and construction industry

    FS Builders earns all of its income from building commercial properties for its clients. FS Builders is primarily in the building and construction industry as 50% or more of its income is from providing building and construction services. It is required to report the total payments it makes to contractors for providing building and construction services.

    End of example

      

    Example 2: All business activity in building and construction

    ABC, a property developer, has purchased a block of land in the Melbourne city precinct and intends to build apartments. ABC has created a separate entity, Upmarket Apartments Pty Ltd, to manage the project and construction of the apartments. Upmarket Apartments is required to report payments to contractors for providing building and construction services because 50% or more of its business activity relates to building and construction services.

    End of example

      

    Example 3: Not all income from building and construction

    Scott’s Cabinet Makers Pty Ltd is a business that makes and installs custom-made kitchen cabinets, which is a type of activity that is a building and construction service. It also makes and sells ornamental wooden carvings.

    The table below shows the income Scott's Cabinet Makers earned from its different activities. 

    Financial year

    Income from cabinet making

    Income from carvings

    Year ended 30 June 2013

    45%

    55%

    Year ended 30 June 2014

    60%

    40%

    Year ended 30 June 2015

    40%

    60%

    Scott’s Cabinet Makers is required to report the payments made to contractors in the 2013–14 financial year because it earned 50% or more of its income from building and construction services in that year. Although it will not earn 50% or more of its income from building and construction services in the 2014–15 financial year, it also needs to report payments to contractors in that year because of its 2013–14 income.

    End of example

      

    Example 4a: Retail business providing minor building and construction services

    Harry’s Hardware is a business that sells building equipment to builders and home owners. For an additional fee, Harry’s Hardware can arrange the installation of certain products, such as a skylight. It does not meet either the activity or income tests of being primarily in the building and construction industry. The store is not required to report payments to contractors who do the installation, because it is primarily in the retail industry rather than building and construction.

    Example 4b: Business with separate entity for building and construction services

    Harry’s Hardware sets up a separate business entity, Harry’s Installation Services, to install the products it sells. Harry’s Hardware is not required to report on payments made to contractors, because it is not carrying on a business that is primarily in the building and construction industry. However, because all of the income for Harry’s Installation Services is from the provision of building and construction services (installation of products) it is required to report payments it makes to contractors for such services.

    End of example

      

    Example 5: Mining infrastructure

    Black Coal establishes a new mining facility that requires the construction of a range of infrastructure. Black Coal contracts Earl’s Earthworks to carry out the work. In turn, Earl’s Earthworks subcontracts the work. Black Coal is not required to report its payments to Earl’s Earthworks because all of its income is from coal mining. However, Earl’s Earthworks, which is carrying on a business primarily in the building and construction industry, is required to report payments it makes to subcontractors.

    End of example

      

    Example 6a: Certification

    J & L Builders was contracted by a property developer to build a 15-storey building. J & L Builders engaged D & R Pty Ltd, to certify each stage of the building work. D & R Pty Ltd followed the project through to the end, carrying out the building inspections and issuing the occupancy permit. J & L Builders is required to report the total payments it made to D & R Pty Ltd for the inspections and certification.

    Example 6b: Inspections and certifications

    RS Electrical Pty Ltd is a business that performs work related to the design, installation and maintenance of electrical systems. The company engaged James to inspect the electrical work on a building project and provide electrical certification. The payments they made to James are reportable.

    Example 6c: Testing and tagging

    LA Plumbing Pty Ltd is a business primarily in the building and construction industry, and has engaged George to test the electrical equipment and tools they use in their business and to tag these. George's business is to test electrical appliances to ensure they are safe. The payments LA Plumbing Pty Ltd makes to George for testing and tagging their electrical equipment and tools are not reportable because the activity is not a building and construction service.

    End of example

      

    Example 7: Equipment hire with or without an operator

    An equipment hire store provides plant and machinery for hire to the building and construction industry – for example, bobcats, scaffolding and tippers (commonly known as ‘dry hire’). The store can also provide the equipment with an operator (commonly known as ‘wet hire’) for an additional fee. A builder who hires a bobcat with an operator (wet hire) needs to report the payment it makes to the equipment hire store because the builder is paying for a building and construction service, not just the equipment hire. Wet hire is a building and construction service.

    End of example

      

    Example 8: Contractor paying another contractor

    Rob's Installation Services (principal contractor) contracts Simon (first-tier subcontractor) to install products. However, Simon is not coping with the amount of work and subcontracts some of the work to Bill (second-tier subcontractor). Rob's Installation Services needs to report on the payments it makes to Simon. If Simon is carrying on a business that is primarily in the building and construction industry, he is required to report the payments he makes to Bill.

    End of example

    Payments for both labour and materials

    If invoices you receive include both labour and materials, whether itemised or combined, you report the whole amount of the payment, unless the labour component is only incidental.

    Example 9: Incidental labour component

    Kevin purchases a stock of new taps from Harry's Hardware to install in a commercial building. Harry installs one tap by way of demonstration, so that Kevin knows how to install the rest. Harry's Hardware invoices Kevin for the taps and includes a small amount for the labour to demonstrate the installation. Kevin does not need to report the payment he makes to Harry's Hardware because the labour component of installing the tap is incidental to the supply of the materials.

    End of example

      

    Example 10: Not incidental

    An electrical business provides labour and materials for various electrical applications. A builder pays the electrical business for the supply and installation of wiring in a commercial fit-out he is managing. Because the provision of the installation service is a building and construction activity and more than incidental to the supply of materials, the builder will be required to report the total payment made to the electrical business. The builder is carrying on a business that is primarily in the building and construction industry.

    End of example
      Last modified: 23 Jun 2016QC 27311