Taxable Payments Report – New Industries Captured in the Reporting Net

Annual contractor reporting

The ATO introduced the requirement to lodge a Taxable Payments Annual Report (TPAR) during the 2013 financial year, initially targeted at the building and construction industry, to address the perceived tax compliance issue of contractors in the industry not correctly reporting their income. Businesses providing cleaning and courier services were also brought into the reporting net from 1 July 2018.

According to Government reports released in May 2018, in the first year of operation (2013 financial year) an additional $2.3 billion in tax was raised from a combination of outstanding tax returns being lodged, GST liabilities being identified, and PAYG withholding on wages being correctly recorded.  As such, it’s no surprise that the Taxable Payment Reporting System is being extended to additional industries.

Importantly, from 1 July 2019, all businesses that provide Road Freight, Information Technology (IT) or Security, Investigation and Surveillance services are now required to lodge a TPAR for each financial year that they meet the requirements. These businesses have until August 2020 to lodge their first report.

Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.

Businesses in the required industries are obliged to report the total payments they make to contractors for these services to the Australian Taxation Office (ATO). The payments recorded in the report will be matched to the income disclosed by contractors in an attempt to ensure that all income has been adequately included.

Failure to lodge the TPAR by the due date may result in penalties being levied by the ATO against applicable businesses.

Click here to read more about the specific requirements for business services within the industries now listed.

Who needs to report?

You need to report if all of the following apply:

  • You are a business that provides:
    • building and construction services;
    • cleaning services;
    • courier services;
    • road freight services;
    • information technology (IT) services; &
    • security, investigation or surveillance services
  • You make payments to contactors in the industries listed above
  • You have an Australian Business Number (ABN);

You are a business that is primarily part of the industries listed above if 50% or more of your business income or activity is derived from providing services in the current or prior financial year.

In addition, if your business provides mixed services, for example not just the services listed above, you may need to lodge a TPAR if the payments you receive for the specified TPAR services make up 10% or more of your annual GST turnover.

When is it due?

The TPAR needs to be lodged with the ATO by 28 August each year that you meet the requirements above.

What needs to be reported?

The following details must be reported for each contractor and for each income year:

  • ABN (if known);
  • Name and address;
  • Gross amount paid to the contractor for the income year (inclusive of GST); and
  • Total GST included in the gross amount.

What do you need to do?

You can lodge your TPAR online, via your tax agent or in paper format. Click here to read more regarding the specifics on lodging your TPAR.

For further information please refer to the ATO website or alternatively contact a member of our Fordham Property and Construction Services Team:

Michael Sutherland

Brett Marshall

Sharon Parker

T. +61 3 9611 6643