Compliance work set to spike for ‘high risk’ industries

Compliance work set to spike for ‘high risk’ industries

Work, accountant, compliance work

Draft legislation released yesterday suggests accountants will have more compliance work to do with their small business clients who operate in what the government has labelled “high risk industries.”

The legislation proposes extending the Taxable Payment Reporting System (TPRS) to those in the cleaning and courier industries, to ensure payments made to contractors in these sectors are reported to the ATO.

This move is an effort to clamp down on the cash economy, and mirrors what the government has done to monitor tax compliance in the building and construction industry.

“But despite the government’s increased integrity measures, the cash economy will remain a challenging adversary to tame. The success of the TPRS in the building and construction industries will be difficult to mirror in the higher volume cleaning and courier industries,” said BDO’s national tax director, Lance Cunningham.

In good news for accountants, the additional compliance burden on small businesses creates an opportunity to increase services to new and existing clients.

“Despite the cleaning industry being targeted, it is accountants that will clean up as this measure will add an additional compliance burden that small businesses will require assistance with, as the ATO attempts to add to the data it already tracks annually and uses for cross-checking tax compliance,” Mr Cunningham told Accountants Daily.

“Many contractors in the cleaning and courier industries are more transient that in other industries, therefore having more documentation requirements for contractors may be a change of culture for some.

“Entities in these industries will need to collect the required information from 1 July 2018 and consider how the required information can be extracted from their record keeping systems well before the first annual report is due for lodgement in August 2019.

“The extension of the contractor payment reporting system to cleaners and couriers will require these payers to make changes to their accounting processes. We expect there will be some payers that find this more difficult than others but as the system has already been implemented in the building industry, the accounting products should be readily available.

“It will be up to accountants to educate their clients in the cleaning and courier industries as to what accounting processes and software they now need, to deal with the new contractor payment reporting system.”

You can read the draft legislation in full here. 

 

Compliance work set to spike for ‘high risk’ industries
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