Private ruling: Taxable payments reporting - Building and construction industry
Date of advice: 15 December 2015
Published: February 2016
Ruling period: 1 July 2014 - 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are drilling and explosive services to facilitate the extraction of rocks and minerals at a mine or quarry site considered to be a building and construction service for the purpose of taxable payments reporting? | A1: Yes

Relevant facts and circumstances: • A substantial amount of the entity's business income is generated from contract work within the mining industry. • The work involves drilling and explosive services at mines and quarry sites • The work is carried out to enable minerals and rocks to be extracted from the mine or quarry by other contractors.

Relevant legislative provisions: Taxation Administration Act 1953 Section 405-5

Reasons for decision: Detailed Reasoning - Detailed reasoning: TAXATION ADMINISTRATION REGULATIONS 1976 - REG 64 Reporting requirements--building and construction industry Taxation Administration Regulations 1976 - Reg 64, Regulation 64(1) states: For section 405- 5 of Schedule 1 to the Act, a supply by a supplier to a purchaser is specified if all of the following circumstances apply: (a) the purchaser is carrying on a business that is primarily in the building and construction industry; (b) the purchaser has an ABN; (c) the supplier supplies to the purchaser: (i) building and construction services; or (ii) a combination of goods and building and construction services, unless the supply of services is incidental to the supply of the goods. Regulation 64 (5) states (5) A purchaser is taken to be carrying on a business that is primarily in the building and construction industry only if: (a) in the current financial year, 50% or more of the purchaser's business activity relates to building and construction services (b) in the current financial year, 50% or more of the purchaser's business income is derived from providing building and construction services; or (c) in the financial year immediately preceding the current financial year, 50% or more of the purchaser's business income was derived from providing building and construction services. Included in Regulation 64 is a list of activities that, if performed on or in relation to any part of a building, structure, works surface or sub surface, would satisfy the definition of building and construction services, included in this list is site preparation. Regulation 64 also includes a list of structures or places that are considered building, structure, works surface or sub surface. Included in this list are mine sites. | Detailed Reasoning - Conclusion: From the information provided, a substantial amount of the work carried out by you is to prepare mine and quarry sites to enable the extraction of minerals by way of using explosives, this activity would fall under "preparation of site" on a mine site. Because 50% or more of your business income is derived from providing building and construction services, you are considered to be a business that is primarily in the building and construction industry for the purposes of the 'taxable payments reporting' obligations.