Statement by a Supplier – What to do if your supplier doesn’t quote an ABN

Do you have suppliers who don’t have or provide you with their ABN? In this scenario, you are required to withhold 47% from their payment and send the withheld amount to the ATO.

However, some suppliers are not required to quote an ABN and can use a Statement by a Supplier to justify why payment should not be withheld.

Individuals or businesses can use this form when any of the following apply:

  • they are not carrying on an enterprise in Australia
  • they are an individual under 18 years and the payment does not exceed $350 per week
  • the payment does not exceed $75, excluding any goods and services tax (GST)
  • the supply that the payment relates to is wholly input taxed
  • they are an individual, and a written statement is provided to the payer to the effect that the supply is either:
    • made in the course or furtherance of an activity done as a private recreational pursuit or hobby, or
    • wholly of a private or domestic nature
  • they are an individual or a partnership without a reasonable expectation of profit or gain
  • the whole of the payment is exempt income.

However, if you have reasonable grounds to believe that the statement from your supplier is false or misleading, you are still required to withhold the full 47% from the supplier’s payment.

If your supplier is operating a business or is entitled to register for an ABN, they cannot use the Statement by a Supplier form.

Get in touch if you have any ‘Statement by a Supplier’ questions or read more on the ATO website.

What is TPAR and how does it affect you?

A Taxable Payments Annual Report (TPAR) tells the ATO about contractor payments for services. This includes subcontractors, consultants and independent contractors who could be either sole traders (individuals), companies, partnerships or trusts.

You may be required to lodge TPAR by 28 August if your business provides:

  • building and construction services
  • cleaning services for contractor payments from 1 July 2018 (first report due by 28 August 2019)
  • courier services for contractor payments from 1 July 2018 (first report due by 28 August 2019)
  • road freight services for contractor payments from 1 July 2019 (first report due by 28 August 2020)
  • information technology (IT) services for contractor payments from 1 July 2019 (first report due by 28 August 2020)
  • security, investigation or surveillance services for contractor payments from 1 July 2019 (first report due by 28 August 2020)

The contractor details you need to report include:

  • their ABN
  • their name and address
  • the gross amount you paid to them for the financial year (including any GST)

The ATO uses this information to identify contractors who haven’t met their tax obligations.

If your business supplies a mix of services, you should work out the percentage of payments received from any of the above services.

If your total contractor payments are 10% or more of your GST turnover (or if you are primarily in the building and construction industry) – you must lodge a TPAR.

Remember that all businesses have a GST turnover, regardless of whether or not you are registered for GST.

Additionally, if you are a government entity you may also need to use a TPAR to report grants paid.

If you are not sure whether you need to report you can contact us or visit the ATO website.

What does the minimum wage increase from 1 July mean for employers?

This month saw a 3% increase to the national minimum wage and the modern award minimum wages, lifting it to $19.49 per hour. This is slightly below last year’s increase of 3.5%, due to a recent dip in the economy.

The 3% increase applies to any employee who gets their pay rate from:

  • the national minimum wage, or
  • a modern award.

All employers should ensure that employees who fall into one of these two categories are paid in accordance with the new minimum wage, which takes effect from their first full pay period on or after 1 July 2019.

If an employee receives an all-inclusive salary, beware that the increase may affect the lawfulness of that salary if it is no longer adequate to compensate them for their award entitlements.

This recent wage increase will also flow onto other areas such as loadings, penalties, allowances and overtime payments.

Note that the current casual loadings for modern awards and award/agreement free employees will remain at 25%.