Tax Administration

Improving tax fairness and compliance

The Government proposes a package of three measures to improve tax compliance across various aspects of the economy. The Government's intention is to create a more level playing field for taxpayers in line with the Government's stated commitment of ensuring that all taxpayers pay their fair share of tax.

The package of reforms announced in this year's Federal Budget is comprised of the following measures:

• Reporting taxable payments

  This measure has two components aimed at improving compliance with taxation obligations by contractors.
  
  Firstly the Government will introduce a requirement for certain businesses in the building and construction industry to report to the Australian Taxation Office (ATO) annually, on payments made to contractors in the industry, along with the contractor's Australian Business Number (ABN), with effect from 1 July 2012. This regime will allow data-matching to provide information for review, targeted audits or further assistance and education.
  
  Secondly, the Government will undertake public consultation during 2011-12 to examine a reporting regime for payments made to contractors in the commercial cleaning industry. The ATO will be funded to implement the reporting regime and to assist with educating the industry about the new regime and their tax obligations.
  
  These measures are a continuation of the Government's policy of increasing compliance arrangements in industries where the use of contractors is prevalent.
  
  

• Enhanced fraud detection and management in relation to tax refunds

  Under this measure, the ATO will focus on preventing instances of over-claiming before tax refunds are issued. The additional funding provided by Government will also allow the ATO to conduct additional business education and/or enforcement activities and develop further intelligence and analytic detection models.
  
  It remains to be seen what effect this measure will have on the processing of legitimate large refund claims.
  
  

• Reporting of Government grants and payments

  Under this measure the ATO will monitor and collect payment information from Government agencies in relation to grants across all three levels of Government, and will develop more sophisticated data-matching capacity to examine compliance by the recipients of Government grants and payments.