Do you need to complete a Taxable Payments Annual Report?Reporting your subcontractor payments to the ATO
DOES YOUR BUSINESS NEED TO COMPLETE A TAXABLE PAYMENTS ANNUAL REPORT?
It’s that time of year when Taxable Payments Annual Reports are due to be completed. Have you ever heard people talking about a Taxable Payments Annual Report and wondered what it is and do you need to complete one?
Well, in simple terms, a Taxable Payments Annual Report tells the ATO about payments that you make to different contractors for providing certain services for your business. A contractor can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.
You will need to lodge a Taxable Payments Annual Report (or TPAR) if you are:
• primarily in the building and construction industry and made payments to contractors for building and construction services. This includes services such as bricklaying, plumbing, fencing and it also includes architectural work (including drafting and design), decorating (including painting), engineering and landscaping construction
• provide cleaning services, even if only as part of their business, and made payments to contractors for providing cleaning services on their behalf
• provide courier services, even if only as part of their business, and made payments to contractors for providing courier services on their behalf.
From 1 July 2019 more industries are now required to complete a Taxable Payments Annual Report.
• road freight services
• information technology (IT) services for contractor payments
• security, investigation or surveillance services for contractor payments
• mixed services (a business that provides one or more of the services listed above)
For mixed services businesses you will need to work out what percentage of your payments are received from any of the above services. If the total payments are 10% or more of your GST turnover (or if you are primarily in the building and construction industry) you must lodge a TPAR. Even if you are not registered for GST, you’ll still need to check if you need to lodge a report. All businesses have a GST turnover, regardless of whether or not they are registered for GST.
Examples of the types of mixed businesses that may need to lodge a TPAR include:
• building maintenance
• franchisees and retailers
• event management.
For these industries the first Taxable Payments Annual Report will be due by 28 August 2020 and will need to include all payments made from 1 July 2019.
The information required to complete a Taxable Payments Annual Report is the contractors name, ABN, address and the gross amount you paid them including any GST. It’s easy to keep a record of these details as they are generally found on the invoices that contractors give you. It is the same information that you need when claiming deductions for contractor expenses.
The ATO will then use this information to ensure the contractor is reporting all their information correctly.
All Taxable Payments Annual Reports should be lodged with the ATO by 28 August each year. Please be aware that penalties may apply if you lodge these later than the due date.
If you need any assistance with completing your Taxable Payments Annual Report please give us a call & we’d be happy to help.
– Dean Kennedy