Do you need to lodge a Taxable Payments Annual Report (TPAR)?

With the end of the financial year behind us, businesses that engage contractors should be considering whether they have a Taxable Payments Annual Report (TPAR) obligation. 

Businesses that are required to lodge a TPAR must do so by 28 August each year.

What is TPAR 

A Taxable Payments Annual Report details payments made to contractors for specific services during the financial year. 

Contractors can include subcontractors, consultants and independent contractors. They can operate as sole traders (individuals), companies, partnerships or trusts. 

Which industries are affected? 

The TPAR reporting requirements apply to businesses providing the following services: 

• Building and construction 
• Cleaning 
• Courier services 
• Road freight services 
• Information technology (IT) 
• Security, investigation or surveillance services

How to determine if you need to lodge 

Step 1: Calculate payments received for relevant services

Add up all payments received for each relevant TPAR service during the financial year, including services performed by employees, contractors or subcontractors on your behalf.

Step 2: Determine your business income

• If you have operated for the full financial year, use your actual business income.
• If you have operated for less than 12 months, use your projected income for a full financial year.

Step 3: Calculate what percentage of your business income is from a relevant service 

Use the following formula:

Total payments received for a relevant service ÷ current or projected business income x 100 = %

• If the result is 10% or greater, and you have paid contractors for those services, a TPAR is likely required.
• You made payments to contractors for a relevant service during the year.

Key deadline

The TPAR must be lodged with the ATO by 28 August following the end of the financial year.

How PKF can help? 

Determining whether your business has a TPAR obligation can be more complex than it first appears, particularly where multiple service lines are involved, or contractor arrangements vary throughout the year.

If you're unsure whether you need to lodge a TPAR or would like assistance reviewing your contractor payments and reporting obligations, please contact us.