Couriers and cleaners to report contractor payments
Recently the Federal Budget included new strict reporting requirements for payments to contractors in the courier and cleaning industries with effect from 1 July 2018.
From 1 July 2018, all entities predominately in the courier or cleaning industry will need to report the following to the Australian Taxation Office. A list of each contractor and their ABN, name, address, the gross amount paid to them in the financial year (including GST), and the total GST included (if any) in the gross amount paid.
The reason behind this policy change was to improve the compliance of both the contractors and the businesses who make payments to contractors for services.
There are major implications for a business when they hire an employee do complete work as opposed to a contractor. These implications can be important from both a commercial perspective as well as for tax purposes.
There are heavy penalties for businesses who are in an agreement with individuals to provide services as a contractor when the law would state that they are employees. As such, a Black Economy Taskforce has been established by the government and will be enforced by the Australian Taxation Office.
If you would like us to undertake a review of your payments for services that are necessary in your business, we would be happy to do so. We will be able to help you make the decision whether the payments are to a contractor or an employee. Please call us to arrange an appointment.
Norman Ruan
Accountant
T: 02 9984 7774
E: normanr@northadvisory.com.au
Martin van der Saag
Director
T: 02 9984 7774
E: martinv@northadvisory.com.au
“From 1 July 2018, all entities predominantly in the courier or cleaning industry will need to report each contractor’s name, ABN, address, gross amount paid and total GST included to the ATO.”
About the author
Cayle Petritsch - Director & Wealth Advisor
Cayle Petritsch, Director and Wealth Advisor, works with our existing clients who have recognised the importance of business owners making strategic financial choices not only for their company, but for their personal finances too.
Cayle saw a great opportunity to expand North Advisory’s services into SMSF/superannuation, personal wealth management, asset protection services and other crucial personal finance facets that business owners need to consider.
His approach to wealth management allows you to receive highly personalised wealth advice. Working closely with Marius, Cayle understands the unique needs of every client, from their lifestyle and business goals to their retirement plans.
Key Takeaways
From 1 July 2018 couriers and cleaners must report contractor payment information to the ATO.
This includes personal and payment data for each contractor engaged during the financial year.
The reporting is aimed at improving compliance in sectors with high contractor engagement.
The ATO’s increased visibility of contractor payments helps detect non-compliance and black-economy practices.
Affected businesses should review their contractor arrangements ahead of the reporting start date.
Early compliance checks — including assessments of whether workers are truly contractors or employees — can prevent breaches and penalties.
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Frequently Asked Questions
What reporting requirement will apply to couriers and cleaners from 1 July 2018?
Businesses predominantly in the courier or cleaning industry must report to the ATO details of payments made to contractors — including their ABN, name, address and amounts paid (gross and GST component).
Which businesses are affected by this new reporting regime?
Entities primarily operating in the courier and cleaning sectors are subject to the reporting requirement starting 1 July 2018.
What specific contractor payment details must be submitted to the ATO?
Required information includes the contractor’s ABN, name, address, gross amount paid for the year (including GST), and the total GST included in that gross amount.
Why has the government introduced these reporting changes?
The changes were introduced to improve tax compliance among subcontractors and the businesses that engage them, particularly in industries with high contractor usage.
What are the risks of incorrectly classifying workers as contractors instead of employees?
The article notes that there are heavy penalties for engaging workers as contractors when they legally should be treated as employees — which can have tax and employment law consequences.
Why was this policy introduced?
The article explains it was introduced to improve tax compliance for both contractors and the businesses paying them.
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