Business to undergo ATO health check before lodging tender bids

From 1 July, businesses tendering for Commonwealth contracts over $4 million will need to provide a statement from the ATO proving they have a satisfactory tax record.

The policy, a recommendation of the black economy taskforce, was welcomed on Friday by Australian Small Business and Family Enterprise Ombudsman Kate Carnell. 

Although a "welcome improvement", Ms Carnell said that more needs to be done to assist and protect small businesses subcontracted to these projects. 

“This is an important step to ensure businesses tendering for government projects are up-to-date with tax payments,” Ms Carnell said.

“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”.

She stressed the importance of contracts being awarded to businesses that operate in a fair and sustainable manner, and advised the government to go a step further.

“The 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,” Ms Carnell said. 

“If businesses do not comply, they should be banned from future tendering for a period of time.”

According to the ATO, the policy specifies that for a satisfactory STR to be issued, a business must be up to date with registration requirements, have lodged at least 90 per cent of their relevant income tax returns that were due in the last four years of operation, and its outstanding undisputed debt must not exceed $10,000.