No tax deduction for non-compliant PAYG and contractor payments
Measures will be enacted to ensure that taxpayers will not be able to claim deductions for payments to their employees such as wages where they have not withheld any amount of PAYG from these payments, despite the PAYG withholding requirements applying.
Similarly, the Government intends to remove deductions for payments made by businesses to contractors where the contractor does not provide an ABN and the business does not withhold any amount of PAYG (again despite the withholding requirements applying).
These measures were recommended by the Black Economy Taskforce.
The revenue expectations linked with this expenditure is quite modest – “a small unquantifiable gain to revenue over the forward estimates period”.
The measures will commence on 1 July 2019.
Cash payments limit: payments made to businesses
The Government will introduce a limit of $10,000 for cash payments made to businesses for goods and services.
This measure will require transactions over a threshold to be made through an electronic payment system or by cheque. Logically it would seem that this threshold amount should be $10,000, but this is not spelt out in the Budget papers or the media release.
The rules will not apply to transactions with:
- financial institutions; or
- consumer-to-consumer non-business transactions.
This measure was recommended by the Black Economy Taskforce. It is designed to support other measures designed to counter the black economy. There is no revenue impact associated with it.The limit will apply from 1 July 2019. The Government will consult further as part of the implementation process.
Reportable payments system extended: security providers, road freight transport and computer design
The Government will extend the taxable payments reporting system (TPRS) to the following industries:
- security providers and investigation services;
- road freight transport; and
- computer system design and related services.
This will extend the TPRS requirements already applying to the building and construction industry. The TPRS requirements will also be extended, from 1 July 2018, to the cleaning and courier industries under measures contained in the Treasury Laws Amendment (Black Economy Taskforce Measures No 1) Bill 2018.
The reporting requirements will apply from 1 July 2019, with the first annual report required in August 2020.