As a business owner, you need to understand your obligations when it comes to compliance and third-party reporting. Keeping accurate records of the taxable payments your business makes to any contractors who are engaged to help provide your services is one of the key reporting obligations that you need to pay particular attention to. That’s where the Taxable Payments Annual Report (TPAR) comes in.
The Taxable Payments Annual Report (TPAR) is an industry-specific annual report for businesses that are required to report the total payments that have been made to contractors. The amount is reported to the Australian Tax Office (ATO) when your business submits its annual TPAR.
The ATO uses the information in the TPAR to match the data of the annual declared income of the contractors your business employs with the payments your business has made to them over the financial year with the ultimate goal of improving compliance.
The ATO is trying to identify if a contractor hasn’t included all their income on their tax return, or if they have failed to lodge a tax return or activity statement, or quoted an incorrect Australian Business Number (ABN) on their invoices, or failed to register for Goods and Services Tax (GST). The TPAR that you submit helps the ATO ensure all contractors are meeting their own tax obligations.
What details need to be included in a TPAR?
All the payments you made to contractors for the financial year need to be included in the report. The details of each payee that need to be included are as follows:
Australian Business Number (ABN)
Name (either the business name or the individual’s name)
Taxable payments, that is, the total amounts for the gross amount paid, including total GST paid, and total tax withheld when an ABN wasn’t quoted. If you’re not clear on why you need to withhold tax where an ABN isn’t quoted, see our article on PAYG Withholding here.
When is TPAR due?
Your TPAR needs to be lodged (submitted to the ATO) by 28 August each year. If you don’t lodge by this date, you may incur penalties.
Who needs to lodge TPAR?
TPAR is not required of all businesses; it is industry specific. If your business provides the following services, even in part, you may be required to submit a TPAR to the ATO:
Information Technology services
Security, investigation, or surveillance services
Building and construction services
Road freight services
You must report the payments you made to contractors in a TPAR if you fulfil the following three criteria:
You have an Australian Business Number (ABN)
You have supplied a relevant service, i.e. one of the above services
You have made payments to one or more contractors to provide the relevant service on your behalf
Who can help me lodge a TPAR?
There are several ways you can lodge your TPAR, such as lodging on paper (using the NAT 74109 form), lodging online, and lodging via business software.
It is important that you don’t scan or photocopy the form once you have filled it out. You will need to mail it to the ATO at their address, which is currently:
Australian Taxation Office PO Box 3128 PENRITH NSW 2740
You can lodge online by going to the online services for business website which you can find here, however you won’t be able to lodge online unless you have the following:
A secure credential MyGovID and Relationship Authorisation Manager
If you want to learn more about accessing services with MyGovID and RAM, visit this website.
Lodge using business software
You can lodge via business software provided the software is SBR-enabled. For a full list of SBR-enabled software visit this website.
If you find you need help preparing and lodging your businesses TPAR, you should reach out to your accountant.
While the ATO is ultimately using the TPAR to target compliance malpractice on the part of the contractors, it can result in compliance issues for your own business as well. If you operate in an industry that frequently uses contractors, such as the construction industry or cleaning services, you need to be across TPAR.
The ATO has been known to review contractors as part of a payroll or BAS audit and certain issues can come to light, such as incorrect tax withholding or incorrect claims on GST. Given this, it can be valuable for you to conduct your own audit of the contractor payments your business has made so that you can ensure that the right ABN is in place and the correct amount of GST was claimed on payments made to the contractors.
I'm a contractor, but I'm having trouble with my reporting system, what should I do?
We’ve found that having the right accounting system set up to begin with can ease the reporting burden. If your system is not capturing the required information throughout the year and you’re finding that you need to go back through a whole year’s worth of payment data to prepare your business’s TPAR at the end of the year, you need to engage professional advice.
Reach out to us to book a meeting.
Causbrooks gives you a client manager supported by a team of knowledgeable small business experts. We’re here to take the guesswork out of running your own business.
Get in touch with us to set up a consultation, or use the contact form on this page to inquire whether our services are right for you.
Any advice contained in this document is general advice only and does not take into consideration the reader’s personal circumstances. Any reference to the reader’s actual circumstances is coincidental. To avoid making a decision not appropriate to you, the content should not be relied upon or act as a substitute for receiving financial advice suitable to your circumstances.