Want a tax deduction for payments to contractors and employees?
Legislation was passed in March, effective from 1 July 2019, regarding payments to contractors and employees. The ATO will deny tax deductions for payments made to contractors and employees where the appropriate withholding tax is not withheld OR where no required notification is made to the Australian Taxation Office.
Any payments made to contractors who do not quote their ABN, and the payer fails to withhold the required 47%, will not be tax deductible.
The legislation covers payments in respect of:
- Employees – e.g. salaries, wages, commissions, bonuses, allowances.
- Contractors – e.g. service providers.
- Labour hire (?) arrangements.
- Directors – e.g. fees.