Everything you need to know about the taxable payments annual report (TPAR)

When running a business there are a wide range of reporting obligations you should be aware of. As the ATO has increased access to data with the advent of single touch payroll (STP) and further initiatives, it is more important than ever to make sure you remain compliant. Taxable payments to contractors are one of these obligations which many business owners need to be aware of. To help out we have created this guide to get you started on taxable payments annual reports (TPAR).

So, what is TPAR?

TPAR is an industry specific report which companies need to use to report total payments they have made to contractors for services. This amount is then reported to the ATO through the TPAR. From there the data will be matched to the annual income declared by the contractor to assist in improving compliance.

The TPAR reports can be used by the ATO to help identify if a contractor hasn’t included all their income on their tax return, failed to lodge tax returns, quoted an incorrect ABN, or have not registered for GST.

Which industries need to know about TPAR?

TPAR does not affect all businesses. As it is an industry specific document only certain businesses will need to be concerned. If your business offers the following services, even if it is only one part of your full-service offering, you may be required to submit a TPAR. The services include:

  • Building and construction
  • Road freight
  • Cleaning
  • Information technology
  • Security, investigation, or surveillance
  • Courier.

Government entities are also obligated to report payments they made to third parties for providing services.

What reporting requirements does TPAR have?

There may be a need for you to report your company’s taxable payments. Reporting requirements differ from industry to industry, but a taxable payments report will generally be required if the following applies to your business:

  • You have an active Australian Business Number (ABN)
  • You have made payments to contractors who have completed a service on your behalf.

Do all payments need to be reported in your TPAR?

Not all payments need to be reported in your TPAR. Payments which do not need to be included on the TPAR are:

  • Payments solely for materials
  • Payments within consolidated groups
  • PAYG withholding payments
  • Contractors who don’t provide an ABN
  • Payments for private and domestic projects
  • Incidental labour
  • Unpaid invoices as of 30 June.

What details need to be included in your TPAR report?

When putting together your TPAR there are a few elements which are important not to forget. A good place to start is including all payments you made for the financial year. Further, the following details of the Payee are required:

  • Their ABN
  • Address
  • Name
  • Total amount paid, total GST paid, total tax withheld if an ABN was not quoted.

Government entities will also have a couple of additional reporting requirements:

  • Whether a “statement by supplier” was provided
  • Details of grants paid to organisations or people with an ABN, including the date paid and the name of the grant.

How does TPAR lodgement work?

Each year you will need to lodge your TPAR by the 28th of August. There are penalties if you miss this date. You can lodge your TPAR in many different forms including, on paper, lodging online, and lodging via business software. You simply need to choose which often best suits your business, and which is most accessible to you.  

Conclusion

The TPAR is important to get right. If you are required to lodge one each year you must do so in order to avoid facing penalties. We do know that running a small business can be busy, so if you simply don’t have the time to take care of these obligations reach out to our team of bookkeepers.