Bonerath & Co.’s Guide to the Taxable Payments Annual Report (TPAR) & How We Can Help

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Are you receiving reminders from the Australian Taxation Office (ATO) about the deadline for lodging your Taxable Payments Annual Report (TPAR)? Do you need a refresher on what’s required to lodge your own report?

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This article provides a detailed overview of the TPAR and its requirements so you can confidently lodge your TPAR.

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What is the Taxable Payments Annual Report?

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The Taxable Payments Annual Report (TPAR) is a mandatory report that certain industries must submit to the ATO. Its purpose is to assist the ATO in identifying contracting parties and ensuring the proper application of ABN withholding taxes.

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The report also helps the ATO verify whether contractors comply with their GST obligations and accurately report their income and tax returns.

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Who is obligated to complete the Taxable Payments Annual Report?

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You must lodge a TPAR if all of the following conditions apply to your business:

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• Your company operates in one of the industries we mention below (mixed services businesses may also need to report).
• You make payments to contractors or subcontractors for the work they have performed.
• You hold an Australian Business Number (ABN).

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Do I need to lodge a Taxable Payments Annual Report?

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If your business operates in specific industries and pays independent contractors or subcontractors for relevant services, then you are generally required to submit a TPAR to the ATO at the end of the fiscal year. The report should include the total payments made to each contractor.

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The industries that require TPAR reporting are:

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• Maintenance services.
• Information technology.
• Construction and building services.
• Road freight services or courier services.
• Surveillance, investigation, or security services.
• Governmental institutions.

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Still unsure if you should be completing a TPAR?

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If you remain unsure whether you should complete a TPAR this financial year, then why not talk to us about the contractors you pay and allow us to help determine if you need to complete a taxable payments annual report? Alternatively, you can access the ATO website to work out if you need to lodge a TPAR.

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While most accounting software programs do include the means to prepare a TPAR once all the required contractor details are entered, Bonerath & Co. can help you set up your software for correct reporting of contractors and review the report before submitting it to the ATO on your behalf.

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What are ‘relevant services’?

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Relevant services refer to work carried out as part of the ordinary operations of a business to generate income. For example, if a consulting firm subcontracts its consulting work to a subcontractor, it is considered a relevant service. On the other hand, hiring an IT consultant to fix your internal network is categorised as an operating expense and not a relevant service.

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What information should be reported?

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The following details must be reported for each contractor:

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• ABN.
• Name and address.
• Total cash payments made to the contractor during the fiscal year (including any GST).
• Total tax withheld if the contractor did not provide an ABN.

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If the contractor has not already provided this information, they are obligated to provide it upon your request.

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Payments that must be reported

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You must disclose the total amount paid to each contractor for services rendered within or in connection with the specified industries. The entire amount should be recorded if you paid for both labour and supplies.

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What doesn’t need to be reported?

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You don’t need to report any of the following payments in your TPAR:

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• Payments to foreign residents for work performed in Australia (as these will typically be subject to the PAYG withholding for foreign residents).
• Any payments for domestic and private projects.
• PAYG withholding payments and payments that are made through single touch payroll (STP).
• Labour-hire payments for workers that are engaged by a labour-hire firm.
• Any unpaid invoices after June 30th.
• Incidental labour.
• Payments made solely for materials.

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When should I lodge a Taxable Payments Annual Report?

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The TPAR must be filed with the Australian Taxation Office by August 28th each year. If you’re looking to lodge your TPAR with confidence and certainty, let Bonerath & Co. complete your TPAR this year and set you up for success next year.