Introduced on 1 July 2012 for businesses providing building and construction services, taxable payments annual reports (TPARs) are an integrity measure regarding payments made to contractors to identify contractors that have not met their tax obligations.
While initially only applicable to businesses operating in the building and construction industry, the Federal Government has progressively expanded the TPAR regime to businesses that provide:
- cleaning or courier services – from 1 July 2018
- road freight services, information technology (IT) services and security, investigation or surveillance services – from 1 July 2019.
TPARs for businesses providing services in the above categories must be lodged with the Australian Taxation Office (ATO) by 28 August 2020.
Who is required to report contractor payments?
Businesses primarily in the building and construction industry
If you run a business that operates primarily in the building and construction industry, you are required to lodge a TPAR with the ATO where you have made payments to contractors for building and construction services.
You are considered to be a business that is primarily in the building and construction industry if any of the following apply:
- in the 2019-20 financial year, 50% or more of your business income is earned from providing building and construction services
- in the 2019-20 financial year, 50% or more of your business activity relates to building and construction services
- in the 2018-19 financial year, 50% or more of your business income was earned from providing building and construction services
Businesses that provide cleaning, courier, road freight, IT or security, investigation or surveillance services
From 1 July 2018, if you are a business that provides courier or cleaning services then you are required to report payments you make to contractors for these services.
From 1 July 2019, if you are a business that provides road freight, IT or security, investigation or surveillance services then you are required to report payments you make to contractors for these services.
Where you provide a range of services you will need to work out the percentage of the payments you receive each year in relation to the various services. If the total payments you receive for these services make up 10% or more of your total GST turnover, you must lodge a report relevant to that industry.
We have prepared industry-specific ‘Frequently Asked Questions’ guides to assist you in determining whether you are required to report.
- Building and construction
- Cleaning services
- Courier services
- IT services
- Road freight services
- Security, investigation or surveillance
What information should you report?
The ATO requires taxpayers to report payments to contractors made between 1 July 2019 and 30 June 2020. Your report must include:
- the contractor’s ABN (if they have one),
- the contractor’s name and address,
- the total amount paid to the contractor for the year, and
- the total GST included in that amount.
Do not include payments subject to PAYG withholding or payments for materials only.
Reports are due to be lodged with the ATO on 28 August 2020 for payments made in the 2019-20 financial year.
It is worth noting that the information provided in the reports is shared with the individual State Revenue Offices for payroll tax purposes. There has been increased compliance activity from the ATO within the last year using the information within lodged TPARs, so it is important to ensure the information provided in a TPAR is accurate.
What are the next steps?
Compliance can be complex and time consuming. If you have an obligation to lodge a 2020 taxable payments annual report and require assistance with the completion and lodgement of the report, there are several ways in which we can assist you with your reporting obligation, as follows:
- We can work with you to determine which entities within your group need to report, and what information needs to be reported for the various contractors you engage; and
- We can also prepare and lodge the annual report efficiently on behalf of the reporting entity using our reporting software package, subject to getting the required information.
For more information about TPAR and how it applies to you and your business, contact a Pitcher Partners representative.