cleaning courier ATO taxable income

Taxable Income of Cleaning and Courier Businesses Under Scrutiny from ATO

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The ATO is out to get cleaning and courier businesses who are under-reporting taxable income. The office will identify these businesses through data from the Expanded Taxable Payments Reporting Scheme– a reporting scheme designed to prevent businesses from falsely reporting income.

The ATO warns businesses to lodge not later than August 28, 2019 a Taxable Payments Annual Report (TPAR) detailing all taxable payments made to their consultants, contractors and sub-contractors in the 2019 financial year.

Australian Taxation Office assistant commissioner Peter Holt said, “The motivation here is really about creating a level playing field and supporting those that are doing the right thing.”

The ATO estimates that there are about 70,000 businesses who have to report. At present, about 30,000 companies have already lodged their report or advised the office that they do not need to lodge.

To be clear, for mixed businesses whose service is not solely cleaning or courier, they will still have to lodge the report if they’re getting more than 10% of their annual income from these kinds of services.  

The Black Economy Taskforce have identified cleaning and courier as high-risk businesses for under-reporting. Thus, TPAR will now be a part of their reporting requirement to the ATO.

Since its implementation, the TPAR has made it possible for the ATO to see any discrepancies between taxable payments contractors are reporting and the taxable payments companies employing them are lodging. 

The scheme has brought billions of tax dollars to the ATO and has also resulted to the recovery of $2.7 billion in 2015-2016 financial year from building and construction sectors alone.

The inclusion of cleaning and courier industry to the scheme this year means the ATO will also be able to identify those in the industry using false or invalid Australian Business Numbers (ABN) in order to under-report taxable income. 

“This reporting lets us know who is contracting with who. It lets us know the ABN of who they’re contracting with and how much business they’re doing,” Mr Holt said.

“We can identify when they’re quoting ABNs that are no longer valid and increase integrity of the system.”

The ABN is an eleven-digit unique identifier of Australian businesses used to track and audit taxable income of companies. 

ABN is important because providing the wrong one allows independent supplier and contractors to dodge tax payments with their transactions, especially cash ones.

Other businesses who are advised by the ATO to report contractor payments and lodge Taxable Payments Annual Report are those in the road freight, IT, security, and investigation or surveillance services starting on July 1, 2019 to August 28, 2020.

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