TPAR: the Taxable Payments Annual Report explained

Who has to lodge

You must lodge a TPAR if you have an ABN, pay contractors (including subcontractors, consultants and independent contractors, whether sole traders, companies, partnerships or trusts) for services, and your business is in one of these industries:

• Building and construction: if you are primarily in the industry, or if payments for building and construction services are a substantial part of your income.
• Cleaning services.
• Courier or road freight services.
• Information technology services.
• Security, investigation or surveillance services.

For the last four, the report is required if the payments you receive for those services are 10% or more of your total GST turnover for the year. A business that does a small amount of cleaning alongside something else may be under the line; a cleaning business that subcontracts is over it. Government entities have their own rules. If you are unsure, the ATO has an online tool to check.

Which payments to report

Report payments to contractors for the relevant services, including the labour component of mixed invoices (labour plus materials). You do not report payments for materials only, payments to employees (those go through payroll and STP), payments within a consolidated group, or payments for private and domestic work.

A plumber who pays an apprentice on wages and a subcontractor plumber per job reports the subcontractor only. A cleaning business that buys chemicals from a supplier and pays a subbie to do bond cleans reports the subbie only.

What to report for each contractor

• Their ABN (if quoted; if not, the no-ABN withholding rules applied and you report the withheld amount).
• Their name and address.
• The total amount paid in the financial year, GST inclusive.
• The GST included in that total.
• Any amount withheld where no ABN was quoted.

Amounts are on a cash basis: what you actually paid between 1 July and 30 June, not what was invoiced.

Due date and how to lodge

The TPAR is due by 28 August each year for the financial year that ended on 30 June. Lodge through ATO online services for sole traders (under Lodgments, then Reports and forms), through your accounting software if it supports TPAR, or through a registered agent. A paper form exists but is slower.

If you are in a covered industry but did not pay any contractors in the year, you can lodge a TPAR non-lodgment advice so the ATO does not chase you. If you no longer need to lodge at all, say because you have stopped using contractors, tell the ATO once and you will not need to submit the advice each year.

Records to keep through the year

The report is easy if the data is already sorted. For every contractor payment:

• Keep their invoice with ABN, name and address.
• Check their ABN on ABN Lookup the first time you pay them.
• Categorise the payment as subcontractor or contractor in your bookkeeping, separate from materials and employees.
• Note the GST on the invoice.

FlowFi flags subcontractor payments as they appear in your bank statement and keeps the invoice attached, so the totals per contractor are ready in July. See record keeping requirements.

Contractor or employee

TPAR is for contractors. If the person you pay works set hours, uses your tools, cannot delegate the work and is paid by the hour rather than for a result, the ATO may consider them an employee regardless of what the invoice says, which brings PAYG withholding and super guarantee obligations. Getting this right matters more than the report itself. The ATO has a decision tool; when in doubt, ask your accountant.

Penalties for not lodging

Failure to lodge penalties can apply, and the ATO actively follows up businesses in the covered industries that have not lodged. Because the report feeds data matching, a missing TPAR also draws attention to your own return. Lodging on time is the low-effort option.