Everything You Need To Know About The Taxable Payments Annual Report (TPAR)
As a business owner, you must stay on top of all reporting obligations for your business. Not being compliant can result in penalties for your business – which is the last thing you want especially if you are still growing your business and you cannot afford unnecessary fees.
One important reporting avenue that especially small to medium business owners need to adhere to is that of taxable payments to contractors.
In today’s blog, we will be unpacking everything that you need to know about the taxable payments annual report (TPAR). Let’s take a look first at what TPAR involves.
The first important thing to understand about TPAR is that it is an industry-specific report. It impacts companies that need to report the total payments they’ve made to contractors for services.
These amounts need to be reported to the Australian Taxation Office (ATO) through the taxable payments annual report (TPAR). Once these amounts are reported, the ATO will apply this information to data match the annual income declared by contractors, which will, in turn, help to improve compliance.
Why Is TPAR Necessary?
According to the ATO, the taxable payments reporting system aims to create a level playing field. This, furthermore, will prevent dishonest operators from gaining an unfair advantage. All information collected in the TPAR allows the ATO to identify contractors who are not meeting their tax obligations.
Does Your Business Need To Report On TPAR?
Although not all businesses need to be concerned about TPAR, some do have a certain amount of responsibility. Usually, a taxable payments report is needed if you have an Australian Business Number (ABN) and you have made payments to contractors for services that they’ve completed on your behalf.
Should your business be providing the following services, including on a small scale, you will likely be expected to submit your TPAR report:
• Building and construction services
• Road freight services
• Cleaning services
• Information technology (IT) services
• Security, investigation, or surveillance service
• Courier services
A further consideration is that national, territory, and local government entities are obliged to report the payments that they have made to third parties for providing services.
However, do remember that certain payments do not need to be reported on. These include:
• Payment for materials only;
• Payments within consolidated groups;
• PAYG withholding payments;
• Contractors who don’t provide an ABN;
• Payments for private and domestic projects;
• Incidental labour; and
• Unpaid invoices, as of 30 June.
Who Does The Phrase “Contractors” Include?
In terms of TPAR, contractors include subcontractors, consultants and independent contractors. These entities could be operating as sole traders, companies, partnerships or trusts.
Key details that you need to report on for these parties are:
• The contractor’s name;
• The contractor’s ABN ;
• The contractor’s address;
• The total amount paid or credited to the contractor over the income year; and
• The amount of any goods and services tax.
Am I Allowed To Lodge My Reports On My Own?
Although you can make use of external parties to assist with TPAR, you could prepare and lodge your business’s reports on your own. Should you decide to get in a consultant to assist with lodging your report, you could contact registered BAS agents or tax agents.
TPAR submissions are due by 28 August annually, and can be sent via lodging on paper (NAT 74109 form), lodging online (which is required for government entities), and lodging via business software.
Need More Information On TPAR?
If you need further information on TPAR, be sure to get in touch with us today if you are unsure what your obligations are. We look forward to assisting you and helping your business to remain compliant.