TPAR – Taxable Payments Annual Report

TPAR is a report businesses make to the ATO of the total payments made to contractors or subcontractors in that financial year.

The aim of this report is to identify operators who have not reported all their income. The information in the TPAR is matched to the contractor’s annual income to identify if they are meeting their tax obligations and compliance.

If a business has supplied a relevant service (or part of a service) and made payments to contractors for services on your behalf, then TPAR is generally required. The relevant services are:

Building and Construction Services
Cleaning Services
Courier or Road Freight Services
Information Technology Services
Security, Investigation or Surveillance Services
Government entities

The only reports needed to be made are those of which payments have been made to contractors for work relevant to carrying on a business. The payments which do NOT need to be reported are:

Payments made for materials only
PAYG Withholding payments
Contractors who do not provide an ABN
Unpaid invoices as of 30/6
Incidental Labor Costs
Payments within consolidated groups
Payments for private and domestic projects

Where invoices have both labor and materials amounts, the labor can be excluded if it is incidental to the supply of materials. The labor payment is considered to be incidental if the labor component is immaterial to the actual supply of the material.

If you are running a business however you are making payments to a contractor for private purposes, you do not need to report it. Only the work in relation to carrying on a business will need to be reported.

Details about the contractor that need to be included in the TPAR report are:

ABN (if known)
Address
Name (Business or Individuals name)
Total payments for the financial year including:
- Gross amount paid (including GST and tax withheld)
- Total GST paid to them
- Total tax withheld if ABN was not quoted

The TPAR is due by the 28th of August each year. Failure to lodge the report by the specified deadline may incur penalties.