Are you paying contractors? You may need to lodge a Taxable payments annual report (TPAR) by 28 August.

If you’re one of the business owners who operate in the building and construction industry, and you pay contractors for providing building and construction services, you need to make some preparation for the Taxable Payments Annual Report (TPAR) which is due 28th of August each year.

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

The Taxable Payments Annual Report summarises every payment you have made to each contractor for the previous year. Through TPAR, compliance of contractors is being observed. Data matching is done to detect contractors who have failed to lodge tax returns or failed to disclose their income.

There’s no reason to dread the TPAR. The team at Highview are here to help you prepare and lodge your taxable payments annual report, and save you from some stress and confusion.

1. Know if You Need to Prepare a TPAR

The Australian Taxation Office (ATO) website has a list of who has to report. The following are included:

  • If your business is primarily in the building and construction industry.
  • If you make payments to contractors for building and construction services (not stock).
  • If you have an ABN Australian Business Number).

2. Know The Payments You Need to Report

You will need to report payments you make to contractors for building and construction services. The following activities are included:

  • Alteration
  • Assembly
  • Construction
  • Demolition
  • Design
  • Destruction
  • Dismantling
  • Erection
  • Excavation
  • Finishing
  • Improvement
  • Installation
  • Maintenance
  • Management of building and construction services
  • Modification
  • Organization of building and construction services
  • Removal
  • Repair
  • Site preparation

3. Know The Details You Need to Report

For each contractor, you need to report the following details each financial year:

  • Australian business number (ABN), if known
  • Name
  • Address
  • Gross amount you paid for the financial year (this is the total paid including GST)
  • Total GST is included in the gross amount you paid.

This information will generally be contained in the invoices you receive from your contractors. The ATO will be closely reviewing the contractor payments and the onus lies on the construction companies to comply by way of keeping detailed contractor records. So be sure you comply accurately.

In summary

The Taxable Payment Annual Report regulation does not only affect the Building and Construction Industry but it is one of the main industries targeted by the regulations. Businesses in the Civil, Commercial and Residential Construction Industries and all Building Contractors who work are no exception. You are required to report payments and must prepare and lodge an annual report on August 28 of each year.

The ATO is now using a data matching tool to identify contractors who have not lodged tax returns or have not included all of their income on tax returns that have been lodged. So essentially the ATO is now relying on you to keep accurate and up to date records of all of your contractor transactions. Part of your compliance requirement is to ensure that your

contractor’s ABN is current and accurate. Make part of your procedure to check out their ABNs when contracting them.

If you are not sure where to go from here, please get in touch with your Highview accountant, or watch the ATO’s helpful video for further details.

Source: Australian Taxation Office

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