The TPRS, which requires certain businesses to report contractor payments has become an important part of the Australian taxation administration system by allowing the ATO to:  

• Identify contractors who do not meet their tax obligations so the ATO can let them know and help them correctly report their income; and
• Make sure businesses aren’t disadvantaged by competitors who don’t declare all their income.

Introducing the TPRS has meant that certain businesses who pay contractors are now required to lodge a Taxable Payments Annual Report (TPAR), which is used by the ATO to identify contractors who are not meeting their tax obligations.

https://www.ato.gov.au/Business/Reports-and-returns/Taxable-payments-annual-report/

Do I need to lodge a TPAR?

Your business may need to lodge a Taxable Payments Annual Report (TPAR) if it made payments to contractors or subcontractors during the financial year and has received at least 10% of your business income from the following services:  

• Building and construction services;
• Cleaning services;
• Courier services;
• Road freight services;
• Information (IT) services;
• Security, investigation, or surveillance services; or
• Mixed services (a business that provides one or more of the services listed above).

What information do I need to provide in my TPAR lodgement?

The information provided in a TPAR allows the ATO to identify contractors/subcontractors who have:  

• Not included all their income on their tax return; 
• Not lodged tax returns or activity statements; 
• Not registered for GST when they are required to do so; or 
• Quoted the wrong ABN on their invoices.

Therefore, records that are required to be kept and be listed in your TPAR include: 

• Contractor name;
• Contractor address;
• Contractor Australian business number (ABN); and
• The amount you paid, including goods and services tax (GST).

The invoice you would have received from the contractor should have the details you need to report. 

Any proposed changes?

One of the proposed changes is to merge the TPRS with the Business Activity Statement lodgement program. Whilst the proposed changes will not come into effect until 1 July 2024, it is essential to ensure that your business is meeting the current obligations to avoid possible reviews or penalties.

What should I do now?

You should speak to your accountant to better understand how the TPAR system operates and the reporting deadlines.

Please contact your professional adviser if you’d like more information about the TPAR and the associated tax compliance requirements.