ATO Reminder: Lodge Your TPAR
The ATO is reminding owners of businesses that provide various services to lodge their taxable payments annual report (TPAR) for the 2019–2020 income year. It estimates that around 280,000 businesses were required to lodge a TPAR for the 2019–2020 financial year, but at the beginning of March around 60,000 businesses still had not complied with the lodgment requirements. The reports were originally due on 28 August 2020. To avoid possible penalties, these businesses are encouraged to lodge as soon as possible.
The ATO notes that many businesses that have engaged delivery services (including food delivery services) though a contractor/subcontractor may not know they have to lodge a report.
The TPAR was introduced to combat the “black economy” which is estimated to cost the Australian community around $50 billion, or 3% of gross domestic product (GDP). It is designed to help the ATO identify contractors or subcontractors who either don’t report or under-report their income (eg through hiding amounts received as “cash in hand”).
“It’s not fair if an honest business misses out on sales because a competitor is under-cutting them by doing things like under-declaring or not declaring income”, Assistant Commissioner Peter Holt has said. “The information we receive in the taxable payments annual report helps us shed light on this and keep things fair.”
While TPAR obligations originally only encompassed the building and construction industry, the report is now required for any businesses that make payments to contractors/subcontractors and provide any of the following services:
- building and construction including plumbing, architectural, electrical, plastering carpentry, engineering and a wide range of other activities;
- cleaning services including interior and exterior cleaning of structures, vehicles, machinery and cleaning for events/COVID-related matters;
- courier services including delivery of items or goods (ie letters, packages, food, etc) by motor vehicle or bicycle, or on foot;
- road freight services including transportation of freight by road, truck hire with driver, and road vehicle towing services;
- IT services including writing, modifying, testing or supporting software, either on site or remotely; and
- security, investigation or surveillance services including patrolling and guarding people, premises or property, or watching or observing an area or security systems.
The business doesn’t need to provide the services exclusively to be captured under the TPAR system – if it only provides the service for a part of the year, or even if it is only a small part of the business, that business may be required to lodge a TPAR. According to the ATO, if the total payments received from the provision of any of these services equal or exceed 10% of the total annual business income, the business will be required to lodge a TPAR.
For example, during COVID, many eateries, grocery stores, pharmacies and other general retailers pivoted to providing home delivery for their customers. As such, they may have needed to engage contractors or subcontactors to provide courier services, if the total payments received for these deliveries or courier services amount to 10% or more of their total business income, they will be required to lodge a TPAR even though they may not have needed to do so previously.
If a business is required to lodge a TPAR, the details they will need to report about each contractor should be easy to find and are generally contained on the invoice the business receives from them. This includes details such as their ABN, name and address, and the gross amount paid for the financial year (including GST).
Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.