Paying workers – Payments to contractors video transcript
Contractors must usually meet their own tax obligations and you usually don’t have to withhold amounts from payments you make to them.
If you hire a contractor who doesn't quote their ABN in their invoice for the work they have performed for you, you must withhold tax from payments you make to them.
Sometimes, a contractor who’s an individual (rather than a company) may ask you to withhold tax from payments you make under a voluntary agreement. If you enter into a voluntary agreement with any of your contractors you withhold an amount from each payment you make to them as detailed in the agreement. The contractor must have an ABN to enter into a voluntary agreement.
For more information about payments where an ABN has not been quoted or about voluntary agreements, go to the ATO’s website.
I’ve heard that if I pay a sub-contractor to do some landscaping work then I will have to report these payments to the ATO?
That’s right, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year. You need to report these payments to the ATO by 28 August each year in the Taxable payments annual report.
This video explains the tax obligations you may have when you pay a contractor to do work for you.