Businesses that provide a ‘relevant service’ may have to lodge a TPAR (Taxable Payments Annual Report) with the ATO.
If your business does need to lodge a TPAR, you will need to get onto it straight away – it’s due on August 14.
What is a ‘relevant service’ and why does it need to be reported?
When it began in 2012, TPAR was designed for the building and construction industry. It meant that payments made by businesses to contractors to provide their services (i.e. building and construction) had to be reported.
However, it now includes several other types of services – including courier, cleaning, road freight, security / investigation / surveillance, and IT.
All these types of services are what the ATO refers to as ‘relevant services’ for TPAR purposes.
The purpose behind TPAR is to improve compliance. For example, the ATO might use the information in a TPAR for data matching or to track down contractors who have failed to lodge tax returns.
How do I know if I must report?
If your business provided any of the above services during the financial year, the next thing to check is whether you made any payments to contractors to provide those services on your business’s behalf.
So for construction, that might include contract carpenters, buildings, landscapers, bricklayers and electricians that you paid during the year to provide services. Note that this refers to contractors only – it does not include employees.
What’s included in a TPAR?
A TPAR needs to include the following details for each contractor:
Legal / trading name.
Australian Business Number (ABN).
Total gross amount paid for the year for services.
Total GST paid for the year.
If there was any contractor that did not provide an ABN, you will also need to report any tax you withheld for that.
What you can exclude from your reporting
There are certain things that do not need reporting:
Materials – if you were billed by a contractor for supply of materials this does not need to be included.
Incidental labour – where a contractor charge is predominantly for supply of materials with labour that was incidental to that, it can be excluded.
Unpaid invoices as at June 30 – you only need to include contractor invoices that you actually paid during the year.
There are certain other exclusions as well – relating to consolidated groups, and payments for private and domestic projects (such as for home renovation).
How to create and lodge your TPAR
Current versions of bookkeeping software generally provide methods for preparing TPARs and lodging them online to the ATO. You can also lodge the report manually using the ATO paper form NAT 74109.
Another option to consider is hiring the services of a professional bookkeeping company to do it for you.
Partnering with the professionals
When you do partner with a professional bookkeeping company, they can take care of your TPAR for you. That way you do not need to stress over the report, and you can continue focusing on providing great services to your clients.
At Bookit, we offer a full range of services including TPAR preparation and lodgement. Get in touch to find out how we help you with your TPAR and with your business bookkeeping in general.