Shed Builders Beware!

Posted on : May 12, 2011

Building contractors are being targeted by the ATO from July 2012 and hence shed erectors are likely to be targeted also. If you don’t understand your tax obligations then you are likely to find yourself facing an ugly Tax Audit.  The ATO have done their sums and from the building industry as a whole they expect to reclaim $300 million in 2014-2015 and over $500 million over four years.

The following article in the SMH states “Mr Shorten said some businesses would be required to report annually on payments made to contractors in the building industry including the contractor’s ABN. The data would then be cross-matched.”

The killer piece of tax legislation for contractors is called Alienation of personal services income and it is a horror (not just the name of it).

The groups that should be unnerved by this ATO blitz are:

  • Builders that get paid (contracted) by a single Shed Company (receiving more than 80% of their income from a single source).
  • Building sub-contractors that work for a single Builder.  This applies to  sub-contractors that work for Shed Companies that are the builder.
  • Any contractor or sub-contractor that receives more than 80% of their income from a single source.

If you are in any of these groups and you have income split with you spouse, and claimed company expenses then you are in for some hurt.  Shedeye recommends that you seek the advice of your Accountant ASAP.

Don’t take this as advice, just a warning to get some advice!  Talk to your Accountant today, if he / she has no experience with alienation of personal services income, find one that does!


2 Responses to “Shed Builders Beware!”

  1. ROOFER said...

    Great Article again Shedeye!

    It’s amazing how this has come out after the budget, attacking incomes of contractors that are basically “forced” to become ABN holders to gain employment – but the benefits gained by this subcontractor group is obvious – they are becoming weathly according to the ATO (or the Government) and so the crackdown is starting.

    These people work in an industry that uses steel, products and labour throughout Australia – and so they are singled out because it seems like a good revenue stream to pay for the public service.

    I’m sending a letter to the MBA (& my useless MP Mr. Sleeper) to protest at the confidential info the unions are after (through the ATO) to gain my business details through the backdoor. I’m happy to give info to the ATO providing they give me written assurance that none of this info goes to unions.

    Now the ATO – What Next? – carbon tax fight – and imported skilled labour – how about investing back in this industry!

  2. shed erector said...

    shed erectors are not wealthy, its a cut throat industry that needs to be regulated better,there’s many people going around doing dodgy work and cutting corners and putting in ridiculously cheap quotes. i have a hard time getting work because ive been told i quote too high, but thats what i need to charge to make it worthwhile for me while erecting sheds to the engineers specs. Otherwise im better off working as a rigger or roofer on commercial jobs earning wages. If the government wants to fix it, recognise it as a trade.

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