We remind businesses that from 1 July 2019 they will only be able to claim deductions for payments that are made to workers (employees or contractors) when they have complied with the pay-as-you-go (PAYG) withholding and reporting obligations for that payment. If the PAYG withholding rules require a business to withhold an amount of tax from a payment (such as is required for salary and wages, bonuses, commissions, director’s fees and payments to contractors if no ABN is provided), the business must withhold the amount and report to the ATO. Otherwise, the payment will be considered ‘non-compliant’ and will not be tax deductible.
Given the new rules, business clients should be aware of the need for independent contractors to have an active ABN. It is important to check (not just rely on a contractor’s advice) that each contractor has a current and valid ABN before making payment.
Our QBO clients should note that the program provides a direct link to the Australian Business Register (ABR) where an ABN can be checked. The direct link to the ABR site can be accessed from the ‘Supplier Information’ screen and choosing ‘verify’ (alongside ABN). Alternatively, please go direct to the ABR website: abr.business.gov.au