INDUSTRY groups have outlined their opposition to the federal government’s new tax reporting requirements for businesses in the building and construction sector, saying the changes will only create more red tape for contractors and small business operator
INDUSTRY groups have outlined their opposition to the federal government’s new tax reporting requirements for businesses in the building and construction sector, saying the changes will only create more red tape for contractors and small business operators.
Master Builders Australia, Independent Contractors Australia and the Housing Industry Association have spoken out against the consultation paper released in May by Assistant Treasurer Bill Shorten to modify the existing reporting regime.
Mr Shorten said the government would introduce a requirement for certain businesses to report to the ATO annually on payments made to contractors, with effect from July 1 2012.
Out of the 11,500 entities that had incorrectly reported payments, 34 per cent were contractors in the building and construction industry (3,910) and, of that figure, 31 per cent had not lodged a tax return (1,212), the paper stated.
Master Builders Australia questioned the validity of the data and claimed existing tax reporting mechanisms were appropriate.
“One can question the veracity or the lack of veracity in connection with the data the ATO has relied upon with respect to the miniscule number of contractors,” Master Builders of WA construction director Kim Richardson said.
“That number is less than 2,000 in an industry with an estimated 330,000 contractors … and if you look at the numbers, the ATO appears to be taking a sledgehammer to a walnut.”
In addition, Mr Richardson said the reporting requirements would only create more red tape for small businesses that operated in the residential property sector.
“When it gets down to it, we need to know what quality of information is required for the reporting purposes,” he said.
“If it’s extensive, it will cost those small businesses time and money because they will have more red tape; and to make matters worse, this is at a time when the industry is struggling with reduced housing starts and reduced activity in the commercial sector.”
Mr Richardson said the reporting requirements led back to the ‘sham contracting’ campaign led by the CFMEU in recent years and the current inquiry into sham contracting by the Australian Building and Construction Commission.
Independent Contractors Australia called the policy a politicised attack against the right of people to be self-employed in the construction sector.
“The consultation paper does not demonstrate that independent contractors in the construction sector are any more or any less compliant than anyone else operating their own small business,” the group said.
“Consequently we view this red-tape attack against self-employed construction workers as the first phase of a broader red-tape attack to be mounted by the government against all self-employed people.”
In addition, Independent Contractors Australia argued that the current system of tax reporting was already robust and that it was hard to imagine how anyone could fall through the ‘net’.
“The planned policy, which introduces massive reporting requirements of all transactions, will not do anything to stop the intentional non-reporting of income,” it said.
“It will simply mean that those who do report and who are already honest in their dealings will be burdened with a huge increase in reporting to the ATO and nothing will be achieved.”
Australia’s largest residential building organisation, the Housing Industry Association has also voiced its concerns on the way the reporting requirements will affect the industry.
“Claims that employers avoid tax by engaging contractors rather than employees are wrong, and the new reporting requirements announced by Mr Shorten, while imposing significant and unjustified additional costs on the industry, will not alter this fact,” HIA managing director Shane Goodwin said.
