How To Prepare and Lodge Your Taxable Payments Annual Report

If you're one of the business owners who operate in the building and construction industry, and you pay contractors for providing building and construction services, you need to make some preparation for the Taxable Payments Annual Report (TPAR) which is due 28th of August each year.

The Taxable payments annual report summarizes every payment you have made to each contractor for the previous year. Through TPAR, compliance of contractors is being observed. Data matching is done to detect contractors who have failed to lodge tax returns or failed to disclose their income.

There’s no reason to dread the TPAR. We're here to help you prepare and lodge your taxable payments annual report, and save you from some stress and confusion.

  1. Know if You Need to Prepare a TPAR

The Australian Taxation Office (ATO) website has a list of who has to report. The following are included:

  • If your business is primarily in the building and construction industry.
  • If you make payments to contractors for building and construction services (not stock)
  • If you have an ABN Australian Business Number)
  1. Know The Payments You Need To Report

You will need to report payments you make to contractors for building and construction services. The following activities are counted:

  • Alteration
  • Assembly
  • Construction
  • Demolition
  • Design
  • Destruction
  • Dismantling
  • Erection
  • Excavation
  • Finishing
  • Improvement
  • Installation
  • Maintenance
  • Management of building and construction services
  • Modification
  • Organization of building and construction services
  • Removal
  • Repair
  • Site preparation

  1. Know The Details You Need to Report

For each contractor, you need to report the following details each financial year:

  • Australian business number (ABN), if known
  • Name
  • Address
  • Gross amount you paid for the financial year( this is the total paid including GST)
  • Total GST is included in the gross amount you paid.

This information will generally be contained in the invoices you receive from your contractors. The ATO will be closely reviewing the contractor payments and the onus lies on the construction companies to comply by way of keeping detailed contractor records. So be sure you comply accurately.

  1. You Can Lodge Online

You can lodge online using the Business Portal or Standard Business Reporting (SBR). To lodge, you will need the following.

  • an Australian business number (ABN)
  • an AUSkey - to protect your security and privacy when dealing with us online
  • accounting software that meets our requirements.
  1. You Can Lodge Through Mail

Another option is to mail the paper form of the Taxable payments annual report. The paper form allows you to report up to nine contractors. Additional forms are needed if you have more than nine contractors.

  1. You Can Lodge Through Business, Tax Agent Or BAS Agent portals

To lodge the Taxable payments annual report using the Business, Tax Agent or BAS Agent portals, you need to create an electronic annual report data file using accounting software. The software must meet the ATO's reporting requirements.

A good accounting system that has a solution for TPAR built-in will ensure that you will be compliant and accurate, while at the same time not becoming too much of an admin burden to produce the report. You can explore several accounting systems and find what suits you best.

  1. Standard Business Reporting (SBR)

You will need SBR-enabled commercial accounting software if you wish to lodge the Taxable payments annual report using SBR. By using SBR, you are giving information directly from an approved accounting software program. The software program will provide validation and confirm receipt of the report.

You can lodge your Taxable payment annual report by using

  • AUSkey
  • SBR-enabled software

Be sure that your software is SBR enabled by checking with your software provider or referring to the SBR product register.

The Taxable Payment Annual Report regulation does not only affect the Building and Construction Industry but it is one of the main industries targeted by the regulations. Businesses in the Civil, Commercial and Residential Construction Industries and all Building Contractors who work are no exception. You are required to report payments and must prepare and lodge an annual report on August 28 of each year.

The ATO is now using a data matching tool to identify contractors who have not lodged tax returns or have not included all of their income on tax returns that have been lodged. So essentially the ATO is now relying on you to keep accurate and up to date records of all of your contractor transactions. Part of your compliance requirement is to ensure that your contractor’s ABN is current and accurate. Make part of your procedure to check out their ABNs when contracting them.

If you are not sure where to go from here please contact us on 1300 728 875.

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