Late last year, the government released a consultation seeking to introduce a new government procurement process that will exclude businesses that do not have a satisfactory tax record.
The measure, introduced as part of its focus on the black economy, will require businesses that tender for government projects valued over $4 million to provider a satisfactory Statement of Tax record (STR) for new tenders from 1 July 2019.
A satisfactory STR will be issued if the tenderer is: up-to-date with registration requirements; lodged at least 90 per cent of all income tax returns, FBT returns and BAS that were due in the last four years or the period of operation if less than four years; and does not have $10,000 or greater in outstanding debt due to the ATO.
The measure is purported to create an even playing field for businesses that comply with their tax obligations.
Speaking to Accountants Daily, Pitcher Partners client director Paul Marino said the measure was an opportunity for tax practitioners to proactively get their clients’ house in order ahead of any tender bid.
“Businesses that tender to government should, first of all, start by undertaking internal due diligence with the assistance of their tax advisor to ensure that all of their filings with the ATO are up to date and that outstanding liabilities are paid,” said Mr Marino.
“This would at a minimum involve a review of the ATO accounts for each entity within their group.
“It is intended that the process from submission with the ATO to receiving the STR should take no longer than four business days so this should be taken into account in the tender submission timeframe for new tenders starting from 1 July 2019.”
Further, as part of the proposal, tax agents or consulting firms that provide tax advisory services to their clients may be required to provide details of their services and confirm that they are not involved in promotion of tax schemes that are not reasonably arguable.
“In recent times there has been a lot of scrutiny in relation to the tax practices and compliance ratings of businesses particularly in the property and construction sector, as well as the promotion of schemes by tax agents,” said Mr Marino.
“This measure could place accountability on tax agents to confirm the level and integrity of the services they provide to such businesses in an attempt to increase overall compliance including for example a statement that they did not suggest or encourage phoenix arrangements.
“This will help even out the playing field for suppliers that aren’t involved in aggressive tax practices and ensure the government contracts with businesses that display best practice.”