Call for mandatory tax reporting
Industries which are not covered by mandatory reporting of payments to contractors should be subject to an ABN withholding tax system to prompt them to rejoin the tax system and to stem arising non-compliant behaviour, according to the Institute of Public Accountants (IPA).
IPA chief executive, Andrew Conway, said the established non-compliance behaviour across the industry would be remedied with the introduction of a withholding tax system, which had already proven successful.
"The experience shown in the construction and building industry has proven that mandatory reporting has been able to reverse entrenched longstanding non-compliance behaviour," he said.
"Not only has taxable payments reporting resulted in measurable improvements in compliance by contractors, it has exposed areas of non-compliance."
Conway said the IPA had called for the instigation of a withholding tax which would mirror similar systems offshore.
"In the absence of mandatory reporting, we recommend the introduction of an ABN withholding tax system similar to that operating effectively in New Zealand," he said.
"It is time to spread the mandatory reporting to other industry sectors."
The recommendation for the tax system would also form part of the IPA's pre-Budget submission.
AUTHOR
Hope William-Smith
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