Building contractors targeted in Australia-wide tax push
The Federal Government is planning to introduce a new reporting regime for contractors in the building and construction industry, commencing on July 1, 2012.
The government is expected to recoup more than half a billion dollars in additional tax revenue though these measures.
The new Report System Policy puts the onus on anyone and everyone in the building industry who hires a contractor to report all monies paid to that contractor. There is potentially a vast amount of additional paperwork associated with these changes.
Spiros Dassakis, SPASA NSW CEO, says he has sent a submission to Treasury arguing against some of the changes and the way in which they’ve come about, while pointing out the apparent unfairness due to the burden of red tape to be faced by contractors and subcontractors.
“I would urge all small business – including retailers – to write to treasury in order to make a stand,” says Dassakis. “You need to either make a stand, or have it thrust on you. This is a big deal. They’re starting with construction because it has a reputation for non-compliance, but it will filter to the other industries, including retail.”
Following the building and construction industry, the next industries to be targeted are financial and insurance services; professional, scientific and technical services; rental, hiring and real estate services; agriculture, forestry and fishing; and retail trade.
Dassakis suggests the Treasury provide education to help contractors comply with the complexities of the Tax Act, rather than simply increasing the amount of data they collect – and burdening contractors with the submission of that data. In fact, the Australian Taxation Office (ATO) already receives considerable information on these transactions through the obligatory taxation processes.
He also says that the impost on companies and subcontractors is so great, it will make the administration of companies and independent contractors unrealistically complex. On top of that, builders and subcontractors will incur additional costs in administration to implement and maintain systems to ensure compliance.
He says the association is very much against tax evasion as this creates a sizeable disadvantage to members who legitimately try to compete against rogue traders. However, these changes are an additional labour and cost burden on those operators who are tax compliant. SPASA suggests the Government would be better off chasing those operators who are non tax compliant.
SPASA has also strongly recommended that the proposal to exclude owner/builders is reviewed – as they believe owner/builders are more likely to avoid their tax obligations as opposed to legitimate operators in the industry.
