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 provide a satisfactory Statement of Tax record (STR) for new tenders from 1 July 2019.
The government is one of the largest procurers of goods and services in the national market. In 2017-18, total Australian government procurement was over $71 billion.
The Procurement Connected Policy (PCP) released by Treasury yesterday will be refined after the first year of implementation and may include additional criteria to determine a satisfactory tax record, such as compliance with superannuation guarantee and PAYG withholding obligations, and no convictions for tax misconduct in connection with phoenixing, bribery and corruption.
The current policy specifies that in order to obtain a satisfactory STR, the business must be correctly registered for an Australian business number, goods and services tax, and tax file number.
It must have lodged at least 90 per cent of relevant income tax, business activity statement and fringe benefits tax lodgments that were due in the last four years of operation from the date of request for an STR, and must not have a $10,000 or greater in in outstanding undisputed debt due, or have a payment plan in place with the ATO.
Businesses with no tax record or a tax record of less than four years in Australia will need to meet additional conditions including having no tax-related convictions in the last four years, and compliance and payment of Australian and foreign tax obligations.
The STR will be valid for 12 months for the time of issue or six months if the business has an Australian tax record of less than four years.
Pitcher Partners client director Paul Marino previously told Accountants Daily that the measure was an opportunity for tax practitioners to proactively get their clients’ house in order ahead of any tender bid.