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What is the taxable payments annual report (TPAR)?

If you’re running a business, it’s important to be aware of all your reporting obligations. In recent years, the Australian Tax Office (ATO) has started to expect increased access to data, so you need to understand your obligations when it comes to compliance and third-party reporting. Taxable payments to contractors are one of the key reporting obligations that small to medium size businesses need to pay attention to. Find out everything you need to know about the taxable payments annual report.

TPAR explained

TPAR stands for taxable payments annual report. Put simply, this is an industry-specific report for companies that need to report the total payments they’ve made to contractors for services. This amount is reported to the ATO through the taxable payments annual report. The ATO will then use this information to data match the annual income declared by contractors, helping to improve compliance.

For example, TPAR reports can help the ATO identify if a contractor hasn’t included all their income on their tax return, failed to lodge tax returns/activity statements, quoted an incorrect ABN on their invoices, or failed to register for GST when they’re required to do so. This ensures that all contractors are meeting their tax obligations.

Which industries are affected by TPAR?

As TPAR is an industry-specific document, not all businesses need to be concerned. If your business provides the following services, even if it’s only part of the services you offer, you may be required to submit a TPAR report:

  • Building and construction services

  • Road freight services

  • Cleaning services

  • Information technology (IT) services

  • Mixed services

  • Security, investigation, or surveillance services

  • Courier services

In addition, federal, state, territory, and local government entities are obligated to report the payments made to third parties for providing services.

What are the reporting requirements for TPAR reports?

You may need to report your company’s taxable payments. Reporting requirements vary depending on the specific industry you’re operating within, but generally, a taxable payments report will be required if the following statements apply to your business:

  • You have an Australian Business Number (ABN)

  • You have made payments to contractors for services that they’ve completed on your behalf

Do all payments need to be reported in your TPAR?

No, it’s important to note that not all payments need to be reported. Payments that you don’t need to include on your taxable payments annual report include:

  • Payment for materials only

  • Payments within consolidated groups

  • PAYG withholding payments

  • Contractors who don’t provide an ABN

  • Payments for private and domestic projects

  • Incidental labour

  • Invoices that are unpaid as of 30 June

What details need to be included in a TPAR report?

When you’re putting together your taxable payments report, you need to include all the payments you made for the financial year. Payee details that you need to include are as follows:

  • ABN (where known)

  • Address

  • Name (business name/individual’s name)

  • Total amounts for gross amount paid, total GST paid, total tax withheld when ABN wasn’t quoted

Government entities have a couple of additional reporting commitments:

  • Whether a ‘statement by a supplier’ was provided

  • Details of grants paid to organisations or people with an ABN, including the date the grant was paid and the name of the grant

How does TPAR lodgement work?

You need to lodge (submit) your TPAR by 28 August each year, and penalties could be applied if you don’t. There are many different TPAR lodgement methods, including lodging on paper (NAT 74109 form), lodging online, and lodging via business software. Simply choose the method that makes the most sense for your business (although be aware that government entities must complete their TPAR lodgement online).

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