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Taxable Payments Annual Report Explained (TPAR)

Q: What is TPAR in Australia?

A TPAR is a taxable payments annual report in Australia. Some businesses and government entities will need to lodge a TPAR for payments made to contractors for services. Some goverment entities would also need to report grants paids to people or organisations with Australian Business Number (ABN).

Q: Who is required to lodge a TPAR?

Most businesses that hire contractors are required to lodge a TPAR if they earn at least 10% of their total income from their services.

Q: What industries require TPAR?

Industries that require TPAR are: building and construction services, information technology (IT) services, courier services, road freight services, cleaning services, security, investigation or surveillance services.

May 10, 2023

As a small business owner, you need to be aware of all the tax reports you need to file each year. The taxable payments annual report (TPAR) is one of these, and it’s a report you must file if you make any taxable payments to contractors.

In certain industries, you need to provide the Australian Taxation Office (ATO) with a list of payments made to third-party contractors for services they perform on your behalf. There are potential penalties if you don’t lodge your TPAR correctly, so it’s important to know whether you are required to submit one and how to do it right.

Keep reading to learn about the TPAR, including the due date and details you must include.

What is the taxable payments annual report?

In short, the TPAR is an industry-specific report for businesses to state how much they paid to contractors for their services. The ATO uses this data to match the annual income that contractors declare. In essence, it ensures everybody is paying their fair share of tax. It also helps the ATO prevent competitors from gaining an unfair advantage by not declaring all their income.

TPARs can help the ATO see if contractors:

Have included all of their income on their tax return
Excluded any activity statements
Quoted an incorrect ABN on their invoices
Failed to register for Goods and Services Tax (GST)

Notably, contractors can refer to subcontractors, consultants, or independent contractors. These third parties can operate as sole traders, partnerships, companies or trusts.

As it’s industry-specific, not every business needs to file a TPAR. It’s important to be aware of the requirements so that you can ensure you are meeting your tax obligations.

The TPAR is due each year on 28 August.

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Reporting TPAR correctly

There are several things you must include on a TPAR. Generally, it must include all payments made to contractors in exchange for their services. However, the exact reporting requirements vary depending on your industry.

Your report should include your Australian Business Number (ABN) and a list of all the payments made to contractors for services completed on your behalf.

Which details do you need to include?

When filling in each part of the TPAR, you must include the following details of the transactions in question:

The name of the business or individual
The ABN (if the ABN has changed in an income year then include each ABN)
The address
The total amounts paid for services
Total amounts paid
Total GST you paid the contractors
Total tax withheld when an ABN wasn’t provided
Gross amount paid for GST and tax withheld

Government entities should also include some additional information, including details of grants paid such as the date, name of the grant and if a statement by a supplier was provided.

In some cases, the ATO may also ask you for more information about the contractor including their phone number, email address and bank account details.

What payments do not need to be included?

Some payments do not need to be included, such as:

Incidental labour
Invoices that are unpaid as of 30 June, only payments made before 30 June need to be reported
Workers engaged under a labour-hire arrangement, including labour-hire firms including
On-hire
Employment agency
Recruitment services
Contract management
Contractors who do not provide/have an ABN
Payments for private or domestic projects
Pay As You Go (PAYG) withholding payments
Payment for materials only
Payments to foreign residents for work performed in Australia if the payments are subject to PAYG withholding

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How to lodge a TPAR

There are different ways to lodge a TPAR, depending on whether you are a sole trader, tax professional, or government entity.

Sole traders and businesses can use the ATO website to lodge a TPAR. You can start filling it in and save it as a draft if you want to do it over time. Businesses can use Standard Business Reporting (SBR) enabled software to create a data file with the taxable payments annual reporting specification. If you don’t have business software, you can use the ATO website and your myGovID; go to the Lodgments section and select Taxable Payments Annual Reporting.

There is also an option to download a paper form online from the ATO and mail it to the office.

Which industries have to lodge TPAR?

The industries where TPARs are a requirement include:

Building and construction
Cleaning
Road freight
Security, investigation, and surveillance
Information technology (IT)
Courier services

If your business operates in a different sector but provides one or more of these things as part of the services you offer, then you may still have to lodge a TPAR.

Furthermore, any government entity is obligated to report the payments to third-party contractors. This includes local, state, and federal government entities.

How to run a TPAR with QuickBooks

Filing taxes can be a time-consuming process, especially when there are extra reports to lodge like the TPAR. The accounting software at QuickBooks can facilitate the process by running a TPAR for your business.

In your account settings, you can add suppliers to each of your expenses. That way, when you file an expense, you can choose whether to include it in your annual TPAR report. Select Expenses in the navigation bar, then choose Suppliers; switch on Show TPAR option for supplier, then save your settings.

In your list of suppliers, you can then check the box to include them in your annual TPAR. This way, there is a full list ready when it comes time to file the report.

Follow these simple steps to create a TPAR:

Log into your QuickBooks account.
Go to Business Overview, then select Reports.
Select Taxable Payments Annual Report. Check the Report Period is correct.
Select Run Report, and QuickBooks will create the report for you.

You need to submit your TPAR to the ATO by 28 August, or you are at risk of penalties.

Make tax season easier with QuickBooks

Filing taxes is easy with QuickBooks’ accounting software. Use it to keep track of your business expenses throughout the year, including payments made to contractors. Plus, with the TPAR option, you can run a TPAR in minutes and create an automated breakdown, giving you more time to focus on your business.

What’s more, QuickBooks can help you with other reports at the end of the financial year, including income tax, deductions, and more. With everything in one place (including access right from your pocket with the mobile app), you can sail through tax season and make sure you lodge the reports you need to.

While every care has been taken to ensure the accuracy of the information presented as at 12 April 2024, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.

FAQs

What is TPAR in Australia?

Who is required to lodge a TPAR?

What industries require TPAR?

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