The Black Economy Procurement Connected Policy aims to increase the integrity of Commonwealth Government procurement processes by promoting good tax behaviour and creating an even playing field for businesses that comply with their tax obligations. The policy levels the playing field for businesses that are already doing the right thing, by locking out their competitors that may undercut prices by not complying with their key tax obligations.
The Black Economy Procurement Connected Policy outlines the key components of the Commonwealth Government’s policy to increase the integrity of government procurement, as recommended in the Black Economy Taskforce’s final report. As this is a Commonwealth Procurement Policy, all non-corporate Commonwealth entities must comply with the policy.
As of 1 July 2019, approaches to market for Commonwealth Government contracts that are valued at over $4 million (including GST) will require all Tenderers to provide a statement from the Australian Taxation Office, showing they have a satisfactory tax record by obtaining a Statement of Tax Record (or ‘STR’). Special rules apply for tenderers that are first tier subcontractors, partnerships, trusts, joint ventures, tax consolidated groups or members of a GST group.
All non-corporate Commonwealth entities must comply with the policy when approaching the market to establish new contracts over $4 million (including GST), and in ensuring STRs remain valid and satisfactory during the contracting and contract management phases of the procurement.
Procurement entities subject to the policy must not contract with any Supplier who does not hold a valid STR.
Note: Before releasing a tender, ensure you are using the correct, updated tender documents, as they contain the requirements relating to Black Economy.
Note: Requirements to obtain an STR do not apply to Panel Engagements.
NOTE: The tenderer is to provide and attach each of the valid and satisfactory STRs referred to in the table below, as applicable to the tenderer. This varies depending on whether they are a body corporate/natural person, a partnership, a trustee, a joint venture participant, a member of a Consolidated Group or a member of a GST Group.
a satisfactory and valid STR:
(i) on behalf of the partnership; and
a satisfactory and valid STR in respect of the:
(i) trustee; and
a satisfactory and valid STR in respect of:
(i) each participant in the joint venture; and
(i) the relevant member of the Consolidated Group; and
(i) the GST Group member; and
Tenderers who fail to provide the correct documentation may be excluded from the process, except in the instance whereby the tenderer has provided an STR report, in which case you may seek clarification as to whether they are in possession of a valid STR.
Tenderers who submit an STR Receipt, but fail to the submit the STR within the required period are to be excluded. Clarification mechanisms may not be utilised in this instance.
A Statement of Tax Record (or ‘STR’) is an official document issued by the Australian Tax Office that certifies that an applicant has complied with its Australian Tax obligations, and therefore has a satisfactory tax record.
The ATO can issue two types of STRs:
There are three types of documents that are produced when an entity applies for an STR.
Applicants using a smartform will receive an automatically generated receipt at the time they lodge the smartform – this receipt will have a time and date stamp in the top right-hand corner, will include the ABN and name of the applying entity, and will set out some details that relate to the type of entity that is applying.
If the applicant applies over the phone, they will receive a ‘reference ID’ number – this is essentially a record that they called the ATO at a certain date and time. Phone applicants will also receive an STR receipt by email that is similar in form to the STR Receipt generated through submission of the smartform.
If the STR Receipt is provided, the tenderer must provide the STR within 4 business days of the closing date and time of the Approach to Market.
An STR Receipt will appear as below:
An STR Taxpayer Report will appear as below:
Generally, an STR will only comprise one paragraph. However, for certain entity types, the STR may include a second paragraph that includes some information about the applicant (for instance, if they are in a partnership or trust relationship, or if they are a member of a tax consolidated group or GST Group. These paragraphs indicate that it is likely the applicant should have provided other STRs to ensure it is compliant with the Black Economy Policy and the relevant Tender Documentation. Therefore, if you see more than one paragraph on an STR, you should consider whether you need to seek legal advice as to whether the tenderer is compliant.
An STR will appear as below:
IMPORTANT: The STR document itself is the only document that you can accept as proof of a satisfactory and valid STR. You must not accept an STR Receipt or a STR Taxpayer Report as evidence that a tenderer has complied with the requirements of either the Tender Documents or the Black Economy Procurement Connected Policy.
Tenderers must submit a valid STR as per the above, in order to be considered for and awarded a contract.
If a contract included a clause that required tenderers to maintain a satisfactory STR over the term of the contract, after contract signature, contract managers are required to review the status of tenderers STRs. Contract managers may choose to check STRs for first tier sub-contractors held by the head contractor during the course of the contract.
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