Since 2012, businesses in certain industries have been required to report payments to their contractors to the ATO via a Taxable Payments Annual Report (TPAR). Understanding the TPAR process and your obligations can help your business stay compliant and avoid potential penalties.

What is TPAR?

The TPAR is a report lodged with the ATO detailing payments made to contractors for providing services.

The ATO uses the report to help detect contractors who have not met their tax obligations, such as declaring income and lodging their tax returns.

TPAR was originally introduced for the building and construction industry but has since expanded to include other industries.

Who Needs to Report?

Businesses in the following industries must lodge a TPAR:

1. Building and Construction including businesses that provide a wide range of services such as plumbing, electrical, and carpentry.
2. Cleaning Services
3. Courier Services
4. Road Freight Services
5. Information Technology (IT) Services including services such as software development, support, and consulting.
6. Security, Investigation, or Surveillance Services

Types of Payments to Report

You need to report payments made to contractors who have provided any of the services listed above during the financial year. The report must include the following information:

• Contractor’s ABN (Australian Business Number)
• Contractor’s Name and Address
• Total Amount Paid (including GST)
• Total GST Amount

It is important to note that payments for materials, parts, and equipment are not included unless these items are part of the total fee for the service provided by the contractor and cannot be separated from the labour component of the invoice.

Lodging Your TPAR

There are several options for lodging your TPAR with the ATO:

Online Services: You can lodge your TPAR through the ATO's online services for business. This is a convenient and secure method.

Business Software: Many accounting software packages can generate and lodge the TPAR directly with the ATO.

Paper Form: If you prefer, you can complete a paper form and mail it to the ATO.

Important Dates

The TPAR is due by August 28th each year. It is crucial to lodge your report on time to avoid penalties.

If you would like to discuss your taxable payments reporting obligations further, please feel free to contact us at the office.