Businesses in certain industries that make payments to contractors must lodge a TPAR, or Taxable Payments Annual Report, to the ATO each year. If you are in one of these industries, keep reading!

• Building and construction services

• Cleaning services

• Courier services

• Road freight services

• IT services

• Security, investigation or surveillance services

So what is a TPAR?

The TPAR is used to report any payments your business has made to contractors to assist the ATO with data-matching. The payments you report will be cross-checked by the ATO to ensure contractors are correctly reporting their income on their tax returns. This ensures everyone is meeting their tax and GST obligations.

The TPAR can also be very helpful for those contractors who are offering their services to several businesses. The information your business submits will flow through to their ATO pre-fill allowing them to cross-check their information.

As always, there are a few things you can do throughout the year to ensure your TPAR lodgement is smooth sailing!

Check your contractors ABN.

Go to https://abr.business.gov.au/ and enter the contractors abn in the search. Check the status of the ABN and their GST registration. It’s really important to check on this regularly as it’s quite common to see changes throughout the year, including a change of GST registration or a change of business structure. We find the best prompt for checking this is when you are preparing your BAS.

What if the contractor has not quoted an ABN?

If the contractor has not provided an ABN on their invoice, contact them immediately before paying the invoice. If an ABN is not provided you may need to withhold an amount from the payment for that supply.

What if there has been a change?

The most common changes you will find are cancellation of ABN and/or changes to GST registration status.

If the ABN status is showing as cancelled there are a couple of reasons for this:

• The ABN may not have been used for some time, prompting an automatic cancellation, or

• The contractor has changed their business structure therefore requiring a new ABN to be issued

• The contractor has notified the abr they no longer require an ABN

It is also quite common for ABN holders to have a change in their GST registration. Often this will change throughout the year once the contractor reaches the turnover threshold. If you notice a change, remember to allocate the correct GST coding from the date the change occurred. If you notice the contractor has not updated the GST component on their invoices contact them immediately. Remember, once an ABN is registered for GST it must be charged and accounted for.

How do I know what to report?

Reportable payments must include a labour component. Do notreport the following:

• Payment for materials only – there must be a labour component on the invoice

• Incidental labour - See “Payments businesses need to report in their TPAR (Incidental Labour)” from the ATO

• Unpaid invoices – TPAR is reported on a cash basis only, therefore do not include any invoices you have not paid at 30 June

How do I lodge my report?

Most small businesses will engage a bookkeeper or accountant to assist with the lodgement of their TPAR, however if you would like to lodge yourself there are a couple of things you’ll need to look at:

• Review your suppliers/contractors and update date any missing abn and contact details

• Review the GST registration of your suppliers/contractors

• Check the GST charged on their invoices aligns with their GST registration – pay close attention to any change of GST registration throughout the financial year

Once you are satisfied your information is correct, you can lodge your TPAR through your online accounting software or the ATO business portal.

If you’d like Cloud9 to help with your TPAR lodgement, simply click here to send us an enquiry.