It’s not just businesses that pay contractors in the building and construction industry that need to lodge a TPAR
The ATO’s taxable payments reporting system (TPRS) is a black economy measure designed to assist the ATO identify contractors who don’t report or under-report their income.
The ATO estimates that around 280,000 businesses need to lodge a Taxable payments annual report (TPAR) for 2019-20, 60,000 of which are overdue.
2020 was the first year that businesses that pay contractors to provide road freight, information technology, security, investigation or surveillance services may need to lodge a TPAR with the ATO. This is in addition to those businesses providing building and construction, cleaning or courier services.
Businesses that have not yet lodged their TPAR need to as soon as possible in order to avoid penalties. Forms were due to be lodged by 28 August 2020 and are now well past that deadline.
Some businesses may not realise they need to lodge a TPAR but may be required to, do so depending on the percentage of payments received for deliveries or courier services.
Many restaurants, cafés, grocery stores, pharmacies and retailers have started paying contractors to deliver their goods to their customers. These businesses may not have previously needed to lodge a TPAR. However, if the total payments received for these deliveries or courier services are 10 per cent or more of the total annual business income, you’ll need to lodge.
If your business makes payments to contractors or subcontractors you may need to lodge a TPAR by 28 August each year.
The taxable payments reporting system aims to create a level playing field – to prevent dishonest operators from gaining an unfair advantage over the majority. The information collected in the TPAR allows the ATO to identify contractors who are not meeting their tax obligations.
You need to know about TPAR if your business provides any of the following services, even if it’s just part of the services you provide each year:
- building and construction services – this category is very broad; it includes plumbing, architectural, electrical, plastering, carpentry, engineering and a wide range of other activities
- cleaning services – this includes interior and exterior cleaning of structures, vehicles, machinery and cleaning for events
- courier services or road freight services – this includes delivery of items or goods (such as parcels, packages, letters and food) by motor vehicle, bicycle or on foot, the transportation of freight by road, truck hire with driver, and road vehicle towing services
- information technology (IT) services – this includes writing, modifying, testing or supporting software to meet a client’s needs, whether on-site or remotely through the internet
- security, investigation or surveillance services – this includes patrolling and guarding people, premises or property; watching or observing an area and monitoring security systems; and investigation specifically related to security and surveillance, not just information gathering
- government entities.
The TPAR details payments made to contractors for providing services. Some government entities also need to report the grants they have paid.
Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.
The details you need to report about each contractor are generally found on the invoice you should have received from them. This includes:
- their Australian business number (ABN), if known
- their name and address
- gross amount you paid to them for the financial year (including any GST).
Got a question about lodging your TPAR form correctly or want to know if your business is required to do so? Get in touch with Salisbury’s Accountants in Albury NSW on 02 6041 3014 for advice and assistance.
Additional information and resources in the form of videos, fact sheets, webcasts and examples to help businesses work out if they need to lodge, how to lodge and what to report is available at ato.gov.au/TPAR.