You will need to lodge a TPAR if your business made payments in the last financial year (ie the one ending 30 June 2023) to contractors providing the following services:
- building and construction;
- courier and road freight;
- information technology (IT);
- security, investigation or surveillance.
Contractors can include subcontractors, consultants and independent contractors. They can operate as sole traders (individuals), companies, partnerships or trusts.
If reportable services are only part of the services your business provides, you need to work out what percentage of the payments you receive are for taxable payment reporting (TPR) services each financial year. You do this to determine if you need to lodge a TPAR.
This does not apply to building and construction services you provide.
If the total payments you receive for TPR services are:
- 10% or more of your business income – you must lodge a TPAR
- less than 10% of your business income – you do not need to lodge a TPAR.
What to report
You need to report the total payment amount if an invoice you receive from a contractor includes both labour and materials.
You do not need to report the following payments in your TPAR:
- payments for materials only;
- incidental labour – if invoices list both materials and labour, you can exclude labour that is incidental to the supply of materials;
- unpaid invoices after 30 June – you only report payments you made on or before 30 June each year;
- workers engaged under a labour hire or on-hire arrangement. This includes a labour hire firm that hires workers under a labour-hire arrangement to provide services;
- pay as you go (PAYG) withholding payments. For example, you do not report payments to employees. These payments are reported through the PAYG withholding annual report or Single Touch Payroll (STP);
- payments to foreign residents for work performed in Australia. These payments are generally subject to PAYG foreign resident withholding. If the payments are not subject to PAYG withholding, then you need to report them in a TPAR;
- foreign residents for work performed overseas;
- contractors who do not quote an Australian business number (ABN);
- payments in consolidated groups; and
- payments for private and domestic projects.
Preparation and lodgment
TPARs are due on 28 August each year. If you do not lodge on time, you may have to pay a penalty. You can help prepare for your TPAR by keeping records of all contractor payments. You can lodge the TPAR or NLA through the ATO’s online services. If you have previously lodged a TPAR but you don’t need to lodge one this year, you can submit a TPAR Non-lodgment advice to let the ATO know. This will avoid unnecessary follow up by the ATO.
This article is for general information only. It does not make recommendations nor does it provide advice to address your personal circumstances. To make an informed decision, always contact a registered tax professional.