The black economy spoiled the finance.
The federal government has unveiled long-awaited plans to crack down on IT contracting and nearly $50 billion in black economy tax evasion, wielding compliance sticks at companies through a series of legislative changes.
The new measure, announced in May`s budget, lists the IT industry as a higher tax avoidance sector, alongside cash-based sectors such as cleaning, construction and construction, and safety.
The Treasury this week released a draft solicitation and explanatory memo on new industry laws detailing which IT contractors the Australian Inland Revenue Authority (ATO) will target.
Strict rules will force companies designated to provide IT services with detailed information about payments to contractors working for them, or face severe penalties and may be disqualified from tax breaks if payments are not followed up.
Contract positions are also included in the taxable payment reporting system, (TPRS), which will require IT to provide ATO with contractor payment data, including:
Technical support;
Management of computer facilities;
Internet and web design consultation;
Computer hardware consultation;
Software development;
Computer network system design and integration;
Software installation;
Computer programming;
Software simulation and testing;
Consultation on computer software; and
systems analysis。
The new TPRS measures are expected to have the greatest impact on systems integration and software development services business.
They do not include traditional hardware and software sales, such as Software as a Service (software-as-a-service), but include custom work performed by contractors.
IT services, which hire foreign contractors, has been a long-term target for revenue agencies, as labor arbitration used by big companies has been accused of being used to weaken local prices, although immigration rules forbid it.
A major concern is whether service companies paying for jobs in Australia through offshore accounts do meet the withholding tax standards they pay in Australia.
"companies that fulfil their tax and other obligations will lose to competitors who violate the rules, which will encourage others to start operating in the black economy to remain competitive," said Odelwell, minister of taxation and financial services. "in general, These measures are an important step in improving tax compliance and preventing businesses from participating in the black economy. "
Stakeholders must submit submissions on new draft legislation and explanatory materials by Friday, 17 August 2018.
