Reporting Protects $2.7 Billion from Black Economy
In an Australian Taxation Office media release, it has been reported that the Taxable Payments Reporting System or TPRS has protected a sum of $2.7 billion from being lost to the black economy within the building and construction industry throughout 2015-2016.
What is the Black Economy?
The Black Economy refers to people who operate entirely outside of the tax and regulatory system who are known to authorities but do not correctly report their tax obligations (Australian Government, 2019). It includes a number of practices such as understatement of takings, the payment and acceptance of cash wages off the books, welfare fraud, sharing economy contractors not declaring their income, moonlighting and phoenixing (where businesses deliberately liquidate to avoid paying employees and creditors).
The data collected by the TRPS allows the ATO to identify contractors who fail to lodge returns or activity statements, fail to register for GST, use false ABNs or fail to report all of their income to the ATO. Deputy Commissioner Deborah Jenkins believes the TPRS is key in fighting the black economy.
“The significant revenue increase we’ve seen from the building and construction industry as a result of the TPRS shows how effective it is in improving tax compliance in an industry.”
“TPRS strengthens our ability to match income tax returns from contractors against what businesses report paying, allowing us to detect those trying to hide income and evade tax. The success of this system proves that if you’re trying to evade your obligations it won’t go unnoticed.”
“Businesses who are doing the right thing don’t need to worry, however if you’re not meeting your tax obligations there will be consequences.”
A recommendation from the Black Economy Taskforce now sees the TPRS being extended to cleaning, courier, road freight, information technology, security, investigation and surveillance services. These industries have been identified as high risk.
Ms Jenkins said the ATO is focused on supporting businesses in these industries to meet their reporting requirements.
“For the financial year 2018-19, businesses that supply courier or cleaning services need to report payments made to contractors they use to deliver those courier or cleaning services using the Taxable payments annual report (TPAR). This will need to cover all relevant transactions from 1 July 2018 to 30 June 2019. The annual report for these businesses is due by 28 August 2019.”
“If your current record keeping isn’t accurately capturing this, I urge you to review the way you keep records or contact your professional advisor immediately to assist you.”
“If a contractor provides you with an invoice which includes labour and materials, you are required to report the total amount of the payment regardless of whether it’s itemised or combined.”
As a managed payroll provider, PaysOnline enables you to correctly report and record your information making it easier for you to reach your obligations. Don’t risk being caught out – for a customised solution fit to streamline your business’s payroll practices, contact us for a quick quote.
For more information on the extension of TPRS or to access educational resources, visit ato.gov.ay/TPAR
Source: Australian Taxation Office
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