What is a TPAR?
TPAR is an industry-specific report for businesses that need to report the total payments they’ve made to contractors for their services. It’s like a payment summary for contractors. Contractors can include subcontractors, consultants and independent contractors. In addition, they can be operating as sole traders, companies, partnerships or trusts.
TPAR was first introduced back on 1st July 2012 and initially applied to the building & construction industry. This was then expanded to other sectors from 1st July 2018. The payments made to contractors are reported to the ATO through the taxable payments annual report. The ATO will then use this information to match the annual income declared by contractors, helping to improve compliance.
TPAR’s help to identify if a contractor has included all their income on their tax return, failed to lodge tax returns or business activity statements, quoted an incorrect ABN on their invoices, or even failed to register for GST when they’re required to do so. This helps to create a level playing field for all businesses.
Which industries are affected by TPAR?
As mentioned before, TPAR is an industry-specific document. If your business provides:
Building and construction services
Cleaning services
Courier or road freight services
Information technology (IT) services
Security, investigation, or surveillance services
you may be required to submit a TPAR report.
What are the reporting requirements for TPAR reports?
If you’re in one of the industries just mentioned, a TPAR is required if:
You have an ABN
And you have made payments to contractors for services that they’ve completed on your behalf.
Do all payments need to be reported in your TPAR?
No, not all payments need to be reported. Payments that don’t need to be included are:
Payment for materials
Payments for Incidental labour
Unpaid invoices as of 30th June each year
PAYG withholding payments
Payments within consolidated groups
Payments for private and domestic services
What details need to be included in a TPAR report?
The details you need to report about each contractor are generally found on the invoice that you should have received from them. This includes:
their ABN
their name and address
the gross amount you paid to them for the financial year (including any GST)
How do you lodge your TPAR?
You need to lodge your TPAR by 28th August each year; otherwise, penalties could apply. There are different lodgement methods, including manual lodgement via an ATO provided form, lodging online via an ATO Business Portal or Tax Agent Portal, or lodging through your business software, such as Xero.
If you’re not sure if you need to complete a TPAR or even if you need assistance preparing and lodging the form, please feel free to reach out to me.