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
T: 02 9984 7774

Martin van der Saag
T: 02 9984 7774

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