Do you run a business in the building and construction industry that pays contractors for building and construction services?
If you do, you need to report details of these payments on the Taxable Payments Annual Report (TPAR) by 28 August 2018 (for payments made during the financial year ended 30 June 2018).
The TPAR system acts as an integrity measure to ensure payments made to contractors are reported to the Australian Taxation Office (ATO) in a similar manner to the reporting of salary and wages payments made to employees. Contractors can be sole traders (individuals), companies, partnerships or trusts. This greatly increases the ATO’s ability to use data matching to track payments being received by contractors in the industry.
Who needs to report?
You need to report if all of the following apply:
- you are a business that is in the building and construction industry,
- you make payments to contractors for building and construction services, and
- you have an Australian business number (ABN).
The taxable payments reporting system is being extended
From 1 July 2018, the TPAR system has been extended to include the courier and cleaning industries. Businesses in these industries will need to collect information from 1 July 2018, with the first annual report due on 28 August, 2019.
There are also plans to extend the taxable payments reporting system to include:
- security providers
- road freight transport
- computer system design and associated services
If passed into legislation, businesses in these three industries will need to ensure they collect information from 1 July 2019, with the first annual report required in August 2020.
What information do you need to report?
You need to report the following information about each contractor:
- their Australian business number (ABN),
- their name and address,
- the gross amount you paid them for the financial year (this is the total amount paid including GST), and
- the total GST included in the gross amount you paid.
You can find this information on your contractor’s invoices.
What payments do you need to report?
You need to report the total payments you make to each contractor for building and construction services that are performed on, or in relation to, any part of a building, structure, works, surface or sub-surface.
The definition of building and construction services is broad and covers a wide range of occupations and activities. It includes services such as bricklaying, plumbing, fencing, architectural work (including drafting and design), decorating (including painting), engineering and landscaping construction.
Examples of occupations and activities are available on the ATO website at ato.gov.au/taxablepaymentsreporting. You will also find a list of examples of buildings, structures, works, surfaces or sub-surfaces, which includes housing, commercial and industrial buildings, footpaths, sports fields and tunnels.
When payments are for both labour and materials, you report the whole amount.
What payments are you not required to report?
- payments for materials only
- unpaid invoices as at 30 June each year
- PAYG withholding payments (these are reported separately)
- payments for private and domestic projects – for example, payments you make for building or renovating your own home
- payments within consolidated groups
How do you lodge your report?
The easiest and most secure way to lodge your report is online using the Business Portal or Standard Business Reporting (SBR).
To lodge online you will need the following:
- an ABN,
- an AUSkey – to protect your security and privacy when with the ATO online, and
- accounting software that can generate the taxable payments annual report.
Does my accounting software assist with the preparation of this?
Yes, most accounting packages including Xero, MYOB and Reckon all support taxable payments reporting.
However, you may be required to do some initial setup to ensure the relevant data is being correctly captured.
If you have any questions about your Taxable Payments Annual Report obligations, please contact our team. You can reach us on (07) 3023 4800 or at email@example.com