Getting reminders about lodging your TPAR report in time to the ATO? Read about the Taxable Payments Annual Report in this article.
What is a Taxable Payments Annual Report?
A Taxable Payments Annual Report is a report required by the ATO from companies from specific industries to help them identify contracting parties and establish whether ABN withholding taxes are correctly applied. The ATO also uses this data to confirm whether contractors need to organise GST, are declaring their income and/or lodging their tax returns correctly.
Do I need to lodge a Taxable Payments Annual Report?
Businesses in the following industries who pay independent contractors or subcontractors for “relevant services” must submit a TPAR to the ATO at the end of the fiscal year detailing the total payments made to each contractor.
- Information Technology
- Services for surveillance, investigation, or security
- Construction and Building Services
- Maintenance Services
- Road Freight Services or Courier Services
- Governmental Institutions
Who is required to report the Taxable Payments Annual Report?
You must report if all of the following conditions apply:
- A company operating in one of the aforementioned industries (mixed services businesses may also need to lodge the TPAR if the business provides any of the above services).
- Pay contractors or subcontractors for the work they have done.
- You own an Australian Business Number (ABN).
What’s a relevant service?
Relevant services are essentially work performed ordinarily in the business to derive income. So if a consulting firm subcontracts its consulting work to a subcontractor then this would be a relevant service. However an example of hiring a IT consultant to fix your own internal network is rather an operating expense and not a relevant service.
What information must you report?
The following details concerning each contractor must be reported:
- Name & Address
- The total amount you paid them in cash throughout the fiscal year (including any GST)
- Total tax withheld in cases when an ABN wasn’t given
If not already provided by the contractor, they are obliged to provide you the information should you request it.
Payments that you must report
- You must disclose the total sums paid to each contractor for services rendered on or in connection with any of the aforementioned industries.
- You must record the entire amount if you paid for both labour and supplies.
Payments that must not be reported
- Payments for materials only or where labor is ancillary to material provision.
- Any bills received but not paid as of June 30th of each year.
- Payments reported through the PAYG withholding annual report or through single touch payroll.
- Private and domestic project payments
When do I need to lodge a Taxable Payments Annual Report?
By August 28 of each year, the TPAR must be filed with the Australian Taxation Office. If you require assistance in preparing & lodging the TPAR please contact our team.