TPAR 101 - Taxable Payments Annual Report - What, Why & How
On the 1st March 2021, the ATO reported that more than 60,000 businesses have not lodged their TPAR for the 2019-2020 financial year. You can read more about that here:
What is TPAR?
TPAR is Taxable Payments Annual Report. It is an annual report lodged with the ATO in an effort to stop contractors either not reporting, or under reporting their income.
When is TPAR due and where do I report to?
Lodgements are due by 28th August following the end of the financial year, and can be lodged via certain software providers, BAS Agents or Tax Agents. The report is sent to the ATO who data match in an effort to catch those non or under reporting contractors.
What is reported?
Details about the contractor paid, such as Name, ABN, address, telephone number and amount paid during the year are all reported to the ATO. This makes it really important to capture details about contractors as they are utilised and accurately report payments in your bookkeeping system. A great way to do this is to attach the invoice from the contractor to the transaction in the software, but also to ensure that contact details are kept up to date in the software. Also important is to check contractor invoices to make sure they contain the correct and necessary information that will be reported to the ATO.
Who needs to report?
Businesses in certain industries need to report. It is suspected that further industries will be added over time, but to date the following industries need to report:building and construction, road freight, information technology, security, investigation, or surveillance services, cleaning, and courier services. But not all payments to all contractors need to be reported. It is only payments to contractors in the same industry that are to be captured. For example, I work as a contract bookkeeper for a builder, but payments to me are not reported because I do not specifically work in the building and construction industry, however, payments to a brick layer or electrician will be reported.
My business falls into one of those industries, but I didn’t pay any contractors. Do I still need to report?
YES - you will need to lodge a NIL TPAR.
What do I do now?
Check the ATO portal for your business to see if the business has eligible lodgements available. If not then you’re off the hook. However, if you see lodgements due then you need to take action to avoid penalties. If there is a lodgement due but your business is not in one of the reporting industries you may need to contact the ATO to edit the industry code that has been assigned to your business.
And, if you need any assistance, you know where to find us!