Government entities and businesses making payments to contractors are required to report these payments and file a Taxable Payments Annual Report (TPAR). Contractors can include consultants, subcontractors, and independent contractors. They can work as sole traders, companies, partnerships or trusts. A TPAR should be filed by 28 August each year.
Who needs to lodge TPAR?
Government entities and some businesses are liable to file a Taxable Payments Annual Report for payments that they made to subcontractors or contractors for specific services during the financial year. Some government entities are required to report grants paid to organisations or people with an Australian Business Number (ABN). A TPAR should be lodged by 28 August each year.
Taxable payment reporting system services
The services that fall under the Taxable Payment Reporting System (TPRS) include:
- Cleaning
- Building and construction
- Courier and road freight
- Information technology (IT)
- Security, investigation or surveillance.
You are liable to lodge a TPAR if your business offers these services and pays contractors to deliver them.
When you offer TPRS services and other unrelated services
If you offer both courier and road freight services, you need to combine the payments you receive for both these services. Do this to check if you need to file a TPAR. If TPRS services are only part of the services that you offer, you must check what percentage of the payments you receive are for TPRS services each financial year. This is done to check whether you need to file a TPAR. This doesn’t apply to the construction and building services you offer:
- 10% or more of your business income: you need to file a TPAR
- If less than 10% of your business income, you are not required to file a TPAR.
For more information to work out if you need to lodge a TPAR, you can get in touch with the accounting firm Port Melbourne.
Steps to check if you need to lodge TPAR
Step 1: Calculate your aggregate payments received from contractors for each relevant service
Include all payments received by your business for each relevant TPRS service during the financial year. Add payments received when contractors, employees, or subcontractors performed services on your behalf.
Step 2: Calculate your current or estimated business income
If you are running your business for:
- The full financial year: You need to use the current business income for the year.
- Less than 12 months of the financial year: You can use your estimated business income. You can do this by determining what your business income will be for the next complete financial year.
Step 3: Calculate what percentage of your business income is received from a relevant service
Use the following formula to calculate this precebage for each financial year:
Total payments received for a relevant service ÷ current or projected business income x 100 = %
You need to file a TPAR if:
- 10% or more of your business income is from a relevant service for the financial year.
- You paid contractors for a relevant service during the year.
If you need to file a TPAR, make sure to report the total contractor payments made to each contractor for the relevant service offered on your behalf.
Payment businesses need to report
You need to report by 28 August each year. You need to report payments made to contractors or subcontractors for the following services:
- Cleaning services
- Courier services
- IT services
- Building and construction services
- Road freight services
- Security, surveillance, or investigation services.
Payment government entities need to report in their TPAR
Federal, territory, state and local government entities should report payments made to an entity, wholly or partly, for offering services in the TPAR. This includes payments made to overseas suppliers and governments.
Services can include actions that:
- a business performs
- offer you support or assistance
- may be performed on goods or in association with the supply of goods.
- are performed as part of commerce or trade.
- may be performed under a contract, but it’s not an employment contract.
Conclusion
Some businesses and government entities are required to lodge a TPAR if they make payments to contractors or subcontractors for specific services during the financial year. To know whether you are required to lodge TPAR, you can speak to an experienced business accountant Melbourne.