Key News Summary:  The ATO issued LCR 2018/D8 to explain and support the amendments requiring ABN holders to now report payments made, on or after 1 July 2019, to sub-contractors for: road freight services; security, investigation or surveillance services; and information technology (IT) services, provided on their behalf.


 

This draft Ruling describes how the ATO intends to apply amendments made by Schedule 2 of the Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Act 2018 (the Amending Act), in relation to the expansion of the taxable payments reporting system (TPRS). [See related TT Article.]

The Amending Act requires entities, that provide particular services, to report details of transactions where they pay contractors to provide those services for them. The reporting requirement will apply to such payments made on or after 1 July 2019, unless a reporting exemption applies.

The history of this Reporting System is that:

  • reporting, of contractor payments, was introduced in the building and construction industry from 1 July 2012.
  • This System extended reporting obligations to courier services and cleaning services, from 1 July 2018.
  • The Amending Act further extends those reporting obligations for payments made on or after 1 July 2019.

The relevant services are:

  • Road freight service includes transportation of freight by road, the renting of trucks with drivers for road freight transport and road vehicle towing services.
  • Security, investigation and surveillance services:
    • Security service: includes patrolling, protecting, screening, watching or guarding any people, premises or property, by any means.
    • Investigation service: includes searching enquiries being made by any means into one or more specific individuals or matters, to determine facts or gather evidence. Although potentially very broad in application, ‘investigation’ in this context is to be understood by reference to the terms ‘security’ and ‘surveillance’.
    • Surveillance service: includes watching or observing an area or location and monitoring of security systems. These services may overlap with security services as identified in paragraph 26 of this Ruling.
  • IT services: involves the provision of expertise in the field of information technologies such as writing, modifying, testing or supporting software to meet the needs of a client; or planning and designing computer systems that integrate computer hardware, software and communication technologies.

The reporting exemption, for each of the following categories of payments, is where the aggregate of the consideration received, by the head contractor, is less than 10% of its ‘current’ or ‘projected GST turnover’ (see s188-15 and s188-20 of the GST Act, respectively).

  • courier services (an existing reporting obligation) grouped with road freight services – which is legislated (Schedule 2, item 3(2) of the Amending Act).
  • security, investigation or surveillance services to be effected by ‘legislative instrument’ made by the Commissioner.
  • IT servicesto be effected by ‘legislative instrument’ made by the Commissioner.

To work out if you need to report

This flowchart is used to work out if you need to report the payments.

COMMENTS are due by 1 February 2019.

[ATO website: LCR 2018/D8; LTN 235, 5/12/18; Tax Month – December 2018]

FJM 8.1.19

CPD (comprehension) questions

  1. This draft ruling relates to the recent extension of the system for reporting contractor payments, to the ATO, for what kind of services?
  2. The reporting obligations relate to services of this type, made on or after what date?
  3. Do the reporting obligations apply only to the holders of Australian Business Numbers (ABNs)?
  4. Other than entities carrying on a business, what other categories of person have ABNs?
  5. Which two of the of the three categories, for a reporting exemption, is of a single type?
  6. Which of the remaining categories, is made up entirely of new categories of payment (commencing on 1 July 2019)?
  7. What is the remaining category, that is made up of a mixture of payments that became reportable from 1 July 2018 and the more recent category that applies from 1 July 2019?
  8. What will be the ‘de minimum’ exemption for payments under each of these categories?
  9. Which of these reporting exemptions is legislated?
  10. How are the reporting exemptions for the other 2 categories of reporting exemption going to be effected?

 

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