Bad BAS reporting could lead to Jail

With the introduction of Taxable Payment Annual Reports (TPAR) the ATO has better data to measure sales for certain businesses. A bricklayer in Queensland has been caught out by TPAR as he was under-reporting sales on his BAS, which has lead to him being convicted and sentenced to 2.5 years in jail for $100,000 in tax evasion.

What is a Taxable Payment Annual Report (TPAR)?

A TPAR is an industry-specific report through which businesses inform the ATO the total payments made to contractors for services in a financial year. The information is then used by the ATO to match the contractors’ income declaration to improve their compliance efforts.

Currently a TPAR is required from any business who provides the following services: 

  • Building & construction services
  • Cleaning services
  • Courier or road freight services
  • Information technology services
  • Security, investigation or surveillance services
  • Government entities.

In the past few years this list has grown and we expect it to continue growing to assist the ATO in checking compliance of businesses with their tax obligations.

In the case of the bricklayer, he appeared in a Brisbane Court a few weeks ago and was found to have underreported income across four quarterly BAS’s. He lodged $85,359 in sales, however, was found to have bank statements with deposits of $375,209. The failure to report the actual sales, resulted in a GST bill of $26,570. As he also understated his income on his tax return, he had an income tax shortfall of $70,441. An analysis of TPAR reports revealed he had quoted an ABN of a trust that he claimed was no longer trading with the ATO.

Therefore, the ATO is using the information reported on the TPAR to make sure businesses are complying with their tax obligations. With the introduction of TPAR to more industries, they will be able to catch out more people who are evading their tax obligations. The TPAR system aims to create a level playing-field. By not declaring your income, the ATO says you are ‘stealing from the community & disadvantaging those who do the right thing’.

If you know any contractors that may need assistance in increasing compliance, feel free to pass on our details and we are happy to have a chat with them. It is extremely important as the ATO increases compliance policies that we are all doing the correct thing.