Published on Aug 5, 2019

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New rules require companies to prove they have a clean tax record when tendering for major government contracts.


Australian Small Business and Family Enterprise Ombudsman Kate Carnell welcomed the change, but said more needs to be done to protect small businesses subcontracted to these projects.


A clean tax record is required to tender for major government contracts  

What do the new rules involve?

From the new financial year, businesses tendering for Commonwealth contracts over $4 million will need to provide a statement from the ATO proving they have a satisfactory tax record.


A government statement said the policy is about reducing black economy behaviour so the government can lead by example and support businesses that are doing the right thing.


This policy is said to level the playing field for businesses that are already doing the right thing by locking out the competition that may undercut prices by not complying with key tax obligations.


“The black economy harms those less able to protect themselves and penalises those doing the right thing,” the statement read.


Ms Carnell said it was important to ensure businesses tendering for government projects are up-to-date with tax payments.


“It provides small businesses, particularly subcontractors who work further down the supply chain, with some security, but certainly more can be done in the procurement space,” Ms Carnell said.


“Small businesses rely on contracts being awarded to businesses that operate in a fair and sustainable manner.”


Carnell said government should also require that tenderers use contracts with subcontractors that comply with unfair contract terms legislation and that all subcontractors are paid on time.


“If businesses do not comply, they should be banned from future tendering for a period of time. I will continue to argue the case for a level playing field and the need to give small business a fair go in the procurement process.”


For more information go to the ATO website.