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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your written advice

Authorisation Number: 1012928387244

Date of advice: 15 December 2015

Ruling

Subject: Taxable payments reporting - Building and construction industry

Question 1

Are drilling and explosive services to facilitate the extraction of rocks and minerals at a mine or quarry site considered to be a building and construction service for the purpose of taxable payments reporting?

Answer

Yes

This ruling applies for the following period:

1 July 2014 - 30 June 2015

The scheme commences on:

1 July 2014

Relevant facts and circumstances

• A substantial amount of the entity's business income is generated from contract work within the mining industry.

• The work involves drilling and explosive services at mines and quarry sites

• The work is carried out to enable minerals and rocks to be extracted from the mine or quarry by other contractors.

Relevant legislative provisions

Taxation Administration Act 1953 Section 405-5

Reasons for decision

Question 1

Are drilling and explosive services to facilitate the extraction of rocks and minerals at a mine or quarry site considered to be a building and construction service for the purpose of taxable payments reporting?

Detailed reasoning

TAXATION ADMINISTRATION REGULATIONS 1976 - REG 64

Reporting requirements--building and construction industry

Taxation Administration Regulations 1976 - Reg 64, Regulation 64(1) states:

    For section 405- 5 of Schedule 1 to the Act, a supply by a supplier to a purchaser is specified if all of the following circumstances apply:

        (a) the purchaser is carrying on a business that is primarily in the building and construction industry;

        (b)  the purchaser has an ABN;

        (c)  the supplier supplies to the purchaser:

(i)  building and construction services; or

        (ii)  a combination of goods and building and construction services, unless the supply of services is incidental to the supply of the goods.

Regulation 64 (5) states

      (5)  A purchaser is taken to be carrying on a business that is primarily in the building and construction industry only if:

        (a)  in the current financial year, 50% or more of the purchaser's business activity relates to building and construction services

        (b)  in the current financial year, 50% or more of the purchaser's business income is derived from providing building and construction services; or

        (c)  in the financial year immediately preceding the current financial year, 50% or more of the purchaser's business income was derived from providing building and construction services.

Included in Regulation 64 is a list of activities that, if performed on or in relation to any part of a building, structure, works surface or sub surface, would satisfy the definition of building and construction services, included in this list is site preparation.

Regulation 64 also includes a list of structures or places that are considered building, structure, works surface or sub surface. Included in this list are mine sites.

Conclusion

From the information provided, a substantial amount of the work carried out by you is to prepare mine and quarry sites to enable the extraction of minerals by way of using explosives, this activity would fall under "preparation of site" on a mine site. Because 50% or more of your business income is derived from providing building and construction services, you are considered to be a business that is primarily in the building and construction industry for the purposes of the 'taxable payments reporting' obligations.


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