Statement of tax record – Requirements for Commonwealth Government tender

What is an STR?

A STR is a statement from the Australian Taxation Office (ATO) that a business is complying with its registration, lodgement and tax payment obligations.

Who needs an STR?

You must obtain a satisfactory STR if either:

• you are a business (prime contractor) tendering for Commonwealth Government procurements with an estimated total value over $4 million (including GST); or
• you are a supplier involved in a panel arrangement when the total value of orders under the arrangement is collectively estimated to be over $4 million (including GST); or
• you are required as outlined in the tender request documentation.

A prime contractor is a business tendering for, or under contract with a Commonwealth Government agency.

It is worthwhile noting that a first-tier subcontractor undertaking work individually valued at over $4 million (including GST) for the prime contractor are also required to have a satisfactory tax record.

Different rules apply depending on the entity structure of the tenderer or subcontractor.

Criteria for a satisfactory STR

In general, a satisfactory STR can be obtained when the business:

• is currently registered for TFN, ABN and GST (partner or trustee may not require ABN or GST if they are not carrying on a business in their own right); and
• has lodged at least 90% of its obligations due in the last four years of operation (from the date requesting for an STR), including:
  • income tax returns
  • business activity statements (BAS)
  • fringe benefits tax (FBT) returns.

*Note reasonable delays in lodgments due to extensions agreed to by the ATO will not affect the entity’s entitlement to a satisfactory STR.

• needs to pay any undisputed debt of $10,000 or greater by the due date, or have a payment plan in place with the ATO (noting disputed debts subject to a formal objection, review or appeal will not affect a satisfactory STR).

New businesses with less than 4 years Australian tax history need to meet additional conditions to obtain a satisfactory STR.

How to request an STR

Businesses currently have TFN or ABN can apply for an STR via ATO online services. The ATO advises the STR will be issued within 4 business days via online services.

New business or international tenderers not yet registered with the ATO can complete and lodge an online form to register.

How long does STR valid for

An STR is valid for:

• 12 months from the time of issue – if you have an Australian tax record of 4 or more years
• 6 months from the time of issue – if you have an Australian tax record of less than 4 years.

The STR must be valid at the closing date of a tender. An updated STR may need to be provided during the life of a contract if this is specified in the terms of the contract.

The requirement of STR emphases the importance of having good compliance history. Taxpayers who are planning to bid for government projects should be aware of these new rules and put in place effective compliance governance policy to ensure on-time lodgement and payment.

Further information can be found on the ATO website here. 

Author: Sophie Chen

Published: 23/11/2022

Source:https://www.ato.gov.au/business/bus/statement-of-tax-record/

All rights reserved. This publication in whole or in part may not be reproduced, distributed or used in any manner whatsoever without the express prior and written consent of Mazars, except for the use of brief quotations in the press, in social media or in another communication tool, as long as Mazars and the source of the publication are duly mentioned. In all cases, Mazars’ intellectual property rights are protected and the Mazars Group shall not be liable for any use of this publication by third parties, either with or without Mazars’ prior authorisation. Also please note that this publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice. Content is accurate as at the date published.