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Black Economy Measure: Increasing the integrity of government procurement

Increasing the integrity of government procurement

Geoffrey Yiu & Daniel Kostoski discuss a new measure aimed at increasing the integrity of government procurement.

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Geoffrey Yiu

Partner, Corporate Tax

KPMG Australia

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All Australian and foreign entities seeking Commonwealth Government contracts worth over $4 million including GST should be aware of the new procurement process, effective 1 July 2019.  Policy requirements state that a satisfactory Statement of Tax Record (‘STR’) must be obtained from the ATO by the tenderer and any first tier subcontractors before the awarding of the contract.

The Australian Taxation Office (ATO) expects to be in a position to allow online STR applications from June 2019.

As the STR will only be valid for 12 months, a business will need to put in place a process to ensure that it requests a fresh STR on a timely basis for each of its relevant entities.  It will also need to monitor developments in what criteria it will need to meet to be able to obtain a future STR.  It is expected that after the first year, the criteria may become more stringent.

Tenderers are required by Commonwealth entities to:

  • provide a satisfactory, valid STR at the time of the tender closing or provide a STR receipt demonstrating a STR has been requested from the ATO. In the latter case the tenderer must provide the valid STR no later than four business days from the close of tender and before the awarding of the contract;
  • hold copies of satisfactory and valid STRs for any first tier subcontractors that the tenderer will engage to deliver goods or services with an estimated value of over $4 million. This is necessary both if the role of the subcontractor is known at the time of submission or if subsequently engaged.

To read more on when a satisfactory STR will be issued, please log on to KPMG Tax Now.

Register for KPMG Tax Now to access more tax-related articles.

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