ATO warns 60,000 businesses to file overdue taxable payments reports or risk penalties

The Australian Taxation Office (ATO) is warning 60,000 businesses who are yet to comply with tax lodgement requirements under the taxable payments reporting system (TPRS) to lodge their reports as soon as possible.

The TPRS — a measure designed to identify contractors who under-report their income — was extended to businesses outside the construction, cleaning and courier industries in 2020.

Any business that pays contractors for road freight, information technology, security, investigation, or surveillance services may need to lodge a taxable payments annual report in the system.

ATO assistant commissioner Peter Holt said in a statement that businesses in retail and hospitality that pay contractors to deliver goods to their customers may now need to lodge a taxable payments annual report in the TPRS.

“These businesses may not have previously needed to lodge a taxable payments annual report. However, if the total payments received for these deliveries or courier services are 10% or more of the total annual business income, you’ll need to lodge,” Holt said.

The ATO estimates that around 280,000 businesses need to lodge a taxable payments annual report for 2019-20.

The reporting system was set up to combat the black economy which costs the Australian community as much as $50 billion — approximately 3% of GDP, the ATO said.

The system, which was first developed in 2013 for the building and construction industry, was ramped up following the black economy taskforce in 2016 to also include the cleaning and courier industries in 2018.

The ATO announced in November it would continue to conduct regular audits of the TPRS to ensure contractors are meeting their income tax and GST requirements.

The ATO says businesses who have not yet lodged their annual reports in the TPRS should lodge them as soon as possible to avoid penalties.

Penalties for non-lodgment of the taxable payments annual report can be up to $5,550 for small and medium sized businesses.

An ATO spokesperson said their office was working closely with businesses and their tax practitioners to encourage them to lodge.

“We are focused on supporting people to meet their obligations and not on applying penalties in the first instance,” the spokesperson told SmartCompany.