Do You Need to Apply for a Statement of Tax Record?
Do you plan to apply for any Commonwealth government tenders? If so, you may need to apply for a Statement of Tax Record (STR) from the Australian Taxation Office (ATO).
Why:
As part of improving the integrity of the government procurement process, and in an attempt to tackle the shadow (and black) economy, from 1 July 2019 businesses who don’t have a satisfactory tax record will be excluded from Commonwealth government tenders.
The aim of this policy is to reward good tax behavior and provide a more level playing field for businesses.
While a satisfactory STR is not evidence of financial viability, it provides an indication of compliance with lodgement and payment obligations managed by the ATO. It is only one of the due diligence measures adopted by government procurement officers.
Satisfactory STR status is expected to be maintained by the successful tenderer during the life of the contract.
When:
Commonwealth government tender request documents must clearly state that supplying a satisfactory STR is a requirement. Generally, these tenders have an estimated value over $4m, including GST.
You can apply for an STR at any time, but it is likely that you would do this close to the time you are lodging a tender submission that requires a STR, so that it has not expired prior to the tender being awarded.
Once issued, generally the STR is valid for 12 months. If the STR does expire between the time of lodging the tender submission and the awarding of the tender, an updated STR may be required to be supplied.
Where the applicant has an ATO account that is less than 4 years old, the STR will be valid for 6 months.
Who:
The STR requirement applies to the tenderer and certain of their first tier subcontractors (those directly engaged by the tenderer/primary contractor).
The tenderer must hold copies of the satisfactory STR’s for its first tier subcontractors who are expected to be performing work valued above $4m (including GST) at the time of lodging the tender documents. All STR’s held must be satisfactory and must not have expired.
There are specific rules that apply to new businesses and foreign tenderers. There are also special rules that apply to partnerships, trusts, joint ventures and tax consolidated groups.
What:
Requirements for a satisfactory STR are based on the following (from the Shadow Economy Procurement Connected Policy – Increasing the integrity of government procurement | Treasury.gov.au )
A satisfactory STR will be issued if the following conditions are met…:
- The applicant is up-to-date with registration requirements which may include being registered for an Australian Business Number (ABN) and GST, and having a Tax File Number;
- The applicant has lodged at least 90 per cent of all income tax returns, Fringe Benefit Tax returns and Business Activity Statements that were due in the last four years or the period of operation if less than four years. Reasonable delays in lodgements due to extensions agreed to by the Australian Taxation Office (ATO) will not affect the receipt of a satisfactory STR; and
- On the date the STR is issued, the applicant does not have $10,000 or greater in overdue debt due to the ATO (excluding debt subject to a taxation objection, review or appeal under the provisions of Part IV C of the Taxation Administration Act 1953). If the applicant has entered into a payment plan with the ATO, they will meet this criterion
The ATO is expected to advise those who receive an unsatisfactory STR the reason for this, and any action that may be undertaken to obtain a satisfactory STR.
How:
To apply for a Statement of Tax Record, go to:
- Online ATO services for your business (the old business portal)
- Select Reports and Forms
- Select Statement of Tax Record
- Follow the prompts.
Once lodged, an STR can take up to 4 business days to issue. If you need to lodge a tender prior to receiving the STR, lodge the receipt that is issued when you apply for the STR with your tender application.
Where you meet the requirements above, a Satisfactory Statement of Tax Record should be issued.
Michelle Wilson
7 November 2023
