Taxable Payments Annual Reporting (TPAR) is where businesses report to the ATO the total payments they make to contractors for services in a financial year. The contractors can operate as any entity structure – sole trader, company, partnership or trusts. The TPAR does not result in additional payments or tax; it is simply reporting information to the ATO.
The ATO uses the information reported to data match what is declared on contractors taxable income and activity statements. The ATO will then know if contractors have failed to lodge a return or activity statement, failed to register or declare GST on their activity statements or haven’t declared their full revenue on a tax return.
Not all businesses need to prepare Taxable Payments Annual Reporting each year. It is only a requirement for industry specific businesses which include:
- Building & construction services
- Road freight & courier services
- Cleaning services
- IT Services
- Security, investigation & surveillance services
Not all payments a business makes need to be reported on TPAR; it is only for payments to contractors for their labour. You do not need to report payments for materials, incidental labour, invoices unpaid at 30 June, payments within a consolidated group and contractors without an ABN.
For each contractor you need to report the following:
- ABN
- Address
- Name (Business name/ Individual name)
- Gross amount paid
- GST paid (if applicable)
It is important to keep records of the above when payments are made to contractors to make completing the TPAR a lot faster, rather than having to chase information from contractors when the report is due.
TPAR needs to be lodged by the 28th of August after each financial year and penalties can apply if the reports are lodged late. The form can be lodged through a few different methods – paper form, lodging through an accounting software and lodging through the online business portal.
Other related blogs:
Employee or contractor – the risks of getting it wrong
When do I need to pay super for contractors?
Author: Rhys Frewin
Email: rhys@faj.com.au
