With the Federal government planning to ramp up infrastructure spending to get the economy going with “nation building” projects, the opportunity is ripe for businesses to take full advantage and tender for these contracts. Before you dive into writing your tender, you should be aware that any contracts over $4m (including GST) will require your business to obtain a statement of tax record (STR) from the ATO.
It should be noted that any first-tier subcontractors undertaking work individually valued at over $4m (including GST) for the primary business will also need to obtain an STR. There may also be different rules depending on the structure of the business (ie partnerships, trusts, joint ventures, subsidiary of a tax consolidated group or a multiple entry consolidated group).
A STR basically shows whether a business has satisfactory engagement with the tax system and is derived from the details contained in ATO systems. To obtain a satisfactory STR, a business must have the following:
- Up to date registration requirements (registered for ABN, GST and having a TFN);
- Lodged at least 90% of obligations under each lodgement type that were due in the last 4 years of operation (from the date of request for an STR) including income tax returns, BASs and FBT returns; and
- Paid any undisputed debt of $10,000 or greater by the due date or have a payment plan in place (does not include disputed debts subject to formal objections, review or appeal).
Businesses that have been in existence less than 4 years will need to meet additional conditions to obtain a satisfactory STR including making statements relating to having a tax record of less than 4 years in Australia, compliance and payment of Australian tax obligations, and having no tax-related convictions in the last 4 years.
If your business receives an unsatisfactory STR, don’t panic, the report will have outlined details of criteria you met or did not meet, or both. From that information you can take corrective action to bring your tax obligations up to date. Once that’s completed, your business can apply for the STR again.
As extra support for businesses that have been affected by COVID-19, if an unsatisfactory STR is issued, the ATO will contact the business to discuss options and help with any corrective action. It notes that where possible, it will assist businesses to obtain lodgement deferrals or put payment plans in place.
Those businesses that have previously applied for an STR should check to see it is still valid prior to tendering for any government contracts as a STR is only valid for 6 or 12 months depending on whether you have an Australian tax record of less or more than 4 years.