Taxable Payments Reporting System to affect road freight industry from 1 July 2019

From 1 July 2019, road freight businesses will have to report payments made to contractors to the ATO. This comes as a result of Federal Parliament passing the Treasury Laws Amendment (Black Economy Taskforce Measures No 2) Act on 15 November 2018.

When will the changes take effect?

As a result of the amendments, road freight businesses must report payments made to contractors to the ATO each year using the Taxable Payments Annual Report. Road freight businesses will need to lodge their first Taxable Payments Annual Report in August 2020 for payments made to contractors between 1 July 2019 and 30 June 2020.

The Act follows recent changes that extended the Taxable Payments Reporting System to businesses providing courier services. Courier businesses need to lodge their first Taxable Payments Annual Report in August 2019 for payments made to contractors between 1 July 2018 and 30 June 2019.

What are ‘road freight services’?

The draft guidance material on the ATO website provides that ‘road freight services’:

• include transportation of freight by road, the leasing or hiring of trucks with drivers for road freight transport (wet hire) and road vehicle towing services
• do not include the leasing or hiring trucks without drivers (dry hire), operating road freight terminals or providing crating or packing services.

What information will need to be reported?

The information road freight businesses will need to report includes:

• the contractor’s ABN (where known)
• the contractor’s name and address
• total amounts paid to the contractor during the financial year (including any GST).

Penalties may apply for not lodging the annual report by the due date.

The ATO will use the information to identify contractors in the industry who are not accurately reporting their income.

The ATO is also likely to share this information with the various Offices of State Revenue to assist in their payroll tax audit activity. Road freight businesses should check that payments to contractors are either included in their taxable wages calculations or fall within one of the relevant exemptions for payroll tax purposes.