Reporting and lodgement of Taxable Payments Annual Report (TPAR) – which relates to eligible payments made to contractors in the 2022-23 financial year – is due by 28 August 2023.
Some businesses and government entities that make payments to contractors within a financial year may be required to report these payments and lodge a TPAR with the ATO.
Read on to understand more about the TPAR system and whether your business may be required to lodge a TPAR for the 2022-23 financial year.
What is the TPAR and Why Does it Exist?
TPAR was introduced in 2012 and was initially applied only to the building and construction industry. It has subsequently been extended to cover additional business and industries (details of which can be found below).
The TPAR system acts as a “check and balance” for reconciling payments made to contractors in certain industries, in comparison to what those contractors are reporting as their taxable income. Information gathered as part of the TPAR process assists the ATO to:
- identify contractors who do not meet their tax obligations so the ATO can let them know and help them correctly report their income
- make sure businesses aren’t disadvantaged by competitors who don’t declare all their income
Which Industries are Included?
If your business makes payments to contractors for providing the following types of services, you may be required to lodge a TPAR.
- building and construction
- cleaning
- courier
- road freight
- information technology
- security, investigation and surveillance
How Do I Know if I Need To Lodge?
The criteria for determining whether a business is required to lodge a TPAR varies depending on the industry/type of business.
In most instances, the requirements are that your business has provided such services to other people or businesses, made payments to contractors or subcontractors to provide these services on behalf of your business and your business has an ABN. It is likely that you will also then need to consider/calculate the overall percentage of income and/or business activity that is related to that type of service/industry and compare that against the percentage requirement for your industry.
Note that under the TPAR requirements, payments to contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.
An individual not running a business is not required to report payments made to contractors for private services.
When is the TPAR lodgement due date?
The final date for TPAR lodgement for the 2022-23 financial year is Monday 28 August 2023. That is not too far away, so it is important to take prompt action to first determine whether you are required to lodge, and then prepare and lodge your TPAR before the deadline.
What Details Need to be Reported?
To help with preparing your TPAR lodgement, it is important to keep accurate records of contractor payments throughout the year. The details that need to be reported about each contractor are generally found on the invoice you should have received from them in regards to the payment. This includes:
- name (business name or individual’s name)
- address
- Australian Business Number (ABN),
- amount you paid to them (including any GST).
You will need to calculate/report the total amount paid to each contractor for the financial year.
How to Lodge?
Depending on your situation and available resources, there are a number of ways to prepare and lodge your TPAR, such as online or paper format. You may be able to use your business software to create a TPAR data file for submission through the ATO Online services.
The tax accountants at The Quinn Group can advise and assist you to ensure that you meet your TPAR lodgement obligation.
Expert TPAR Help
As with any taxation or reporting obligation, it is important to take proactive steps to ensure that you are making submissions that are both correct, and on time.
The team of tax accountants at The Quinn Group can help you to navigate the TPAR reporting and lodgement requirements and process. We can assist you with all aspects – from determining whether you are required to lodge a TPAR, through to preparing and lodging the report.
Contact us on 1300 QUINNS (1300 784 667) or +61 2 9223 9166 or submit an online enquiry to arrange an appointment.
