What is the taxable payments annual report (TPAR)? When And What Needs To Be Done?
The Taxable Payments Annual Report (TPAR) is an industry-specific report through which businesses inform the ATO of the total payments made to contractors for services in that financial year. This information is then used by the ATO to match the contractors’ income declarations to improve their compliance efforts. The information provided in these reports provides the ATO with the information that allows it to identify contractors who have:
- Not included all their income on their tax return
- Not lodged tax returns or activity statements
- Not registered for GST where they are required to do so
- Quoted the wrong ABN on their invoices
A TPAR is generally required by businesses that have an Australian Business Number (ABN), have supplied a relevant service and have made payments to contractors for services completed on your behalf. Contractors can be operating as sole traders, partnerships, companies, or trusts. Some government entities need to report grants paid to people or organisations with an Australian business number (ABN). The following services are considered relevant:
- building and construction services
- cleaning services
- courier services or road freight services
- information technology (IT) services
- security, investigation or surveillance services
- government entities
The TPAR is required to be lodged with the Australian Taxation office by 28 August each year. If your business does not need to lodge a TPAR for a particular financial year, consider submitting an optional non-lodgement advice to avoid unnecessary follow-up about TPAR lodgements.
Remember: Keeping accurate records can help you preparing the TPAR easier.
Who needs to report?
You need to report if all of the following apply:
Are a business that is in the one of the above industries (mixed services business may also need to lodge TPAR if the business provides any of the above services).
Make payments to contractors or subcontractors for services provided.
Have an Australian Business Number (ABN).
Payments you do not report
Do not report the following:
- Payments for materials only or where labour is incidental to supply of materials.
- Any invoices that you have received but not paid as at 30 June each year.
- Payment which are reported through PAYG withholding annual report or single touch payroll.
- Payments for private and domestic projects.
From 23 March 2022, the ATO will apply failure to lodge penalties to those who:
- did not lodge their 2021 or prior year TPAR;
- have already been sent three non-lodgment letters about their overdue TPAR;
- do not respond to an ATO follow-up phone call about their overdue TPAR.
Who can report?
Tax Agents and BAS Agents can advise, prepare, and lodge the TPAR, while business owners can also prepare and lodge the report.