If your business employs contractors to complete certain services on your behalf, then you may be required to complete and lodge a taxable payments annual report (TPAR) to the Australian Taxation Office (ATO).
The TPAR is a report that has been put in place to help improve the integrity of contractors when declaring their annual income with the ATO. This report provides information to the ATO which they then use to data match with the declaration provided by contractors, ensuring that they meet their tax obligations.
Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.
Which industries need to lodge a TPAR?
The TPAR has been in operation for a number of years for the building and construction services industry, however it has since extended to include the industries below:
- cleaning services
- courier and road freight services
- IT services
- security, investigation or surveillance services
- government entities
What information needs to be provided?
If you operate in any of the industries mentioned above, you will need to report details on each contractor including:
- their Australian business number (ABN), if known
- their name and address
- gross amount you paid to them for the financial year (including any GST)
The following payments do not need to be included on the TPAR:
- payment for materials only
- incidental labour
- invoices that are unpaid as of 30 June
- PAYG withholding payments
- payments within consolidated groups
- payments for private and domestic projects
How do you lodge a TPAR?
Keep 28 August in your calendar as an important date as your TPAR is due to the ATO by this date each year. Unfortunately businesses that do not lodge on time may face penalties.
There are several different methods to lodge your TPAR, including lodging online, on paper using the NAT 74109 form, or via your business software. Another method is to employ your tax or BAS agent to lodge on your behalf. These professionals have experience with lodging these reports and have the ability to make the process quicker, easier and stress-free for you.
Talk to us and see how we can help with your TPAR obligations.