Taxable Payments Annual Report
Update (16/08/2019): Originally, we reported that TPARs were not going to be mandatory for Road Freight services or Building and construction services until 2020. The ATO have published revised dates (read here), stating that TPARs are mandatory as of this financial year (July 1st) and needs to be completed by August 28th. They also revised the page about TPARs on July 5th 2019).
The Australian Taxation Office (ATO) introduced a Taxable Payments Annual Report (TPAR) in 2017. A TPAR informs the ATO about any payments made by a company to subcontractors, consultants or independent contractors (read more here). Due to some contractors neglecting to lodge their full income, the ATO implemented the TPAR in an effort to reduce the amount of undeclared income by having business declare their expenses spent on contractors.
Businesses that provide services and employ contractors to complete that service are required to complete a TPAR form (a full explanation can be found here).
These services are:
- Building and construction (examples of Building and Construction services needing to complete a TPAR can be read here)
- Cleaning Services (examples of Cleaning services needing to complete a TPAR can be read here)
- Courier Services (examples of Courier services needing to complete a TPAR can be read here)
- Road Freight services (read more here)
As of this year, a TPAR has become a mandatory form for Cleaning and Courier services, Building and Construction services, and Road freight services. A TPAR needs to be completed if a business makes at least 10% of their GST turnover from one of the above services and make payments to a contractor to complete that service.
The information required to complete a TPAR are:
- Australian Business Number (ABN)
- Name and Address
- Total amounts for the financial year:
- The pre-tax Gross amount paid (including GST)
- GST you paid the contractor
- Total tax withheld (if an ABN is not provided)
The ATO will use this information to verify that contractors are reporting their income correctly. Note, businesses only need to report on invoices that are paid before June 30 each year, and the TPAR is due on the 28th of August the following year (i.e. for the period of 1st July 2018-30th June 2019 the report is due 28th August 2019).
Currently, the ConNote module contains the Subcontractor Payment Authority (SPA) subsystem, and is designed to track payments made to subcontractors (i.e. independent truck drivers who are contracted, rather than employees). The SPA window allows staff to enter the contractor’s details, trip details, and any deductions.
If a business is using the SPA subsystem, it is already collecting the relevant information to lodge a TPAR. Once Single Touch Payroll (STP) functionality has been rolled out to the Payroll module, the development team can implement an update that will automate the collection of the information required for the TPAR and will send it off to the ATO as part of the Payroll module, even if the STP features aren’t required by the business.
Currently, a TPAR needs to be filled out manually, either online (done here) or by hand. Once STP is rolled out in Payroll, the SPA subsystem can be linked with a businesses AUSkey and a new option displayed to submit the TPAR. The system will look for any payments that have not yet been reported, and include them in the submission to the ATO.
Enquires about ConNote or the Modular System can be sent to: firstname.lastname@example.org
Links from the article (retrieved 21st June 2019):
- https://www.ato.gov.au/General/Other-languages/In-detail/Information-in-other-languages/Taxable-Payments-Annual-Report/ (Initially retrieved June 21st, it has been modified as of July 5th 2019)
Links from the update (retrieved 16th August 2019):
- Taxable Payments Reporting System (TPRS):
More resources can be found here: https://www.ato.gov.au/Business/Reports-and-returns/Taxable-payments-annual-report/Resources-to-help-you/