If you own a business in the building and construction industry, you’re required to keep track of all payments you make to contractors. Each year you must report these payments to the Taxation Office by August 28. For this reporting, you will use the Taxable Payments Annual Report (TPAR) form. Here are the basics you need to understand to properly lodge this form :

Which payments am I required to report ?

This reporting is on a “cash basis,” which means that you only report the payments you actually made during the year you’re reporting on. Unpaid invoices and future commitments as of June 30 are not included in this accounting. Also, while you must report payments that you make for all construction-related services, you don’t have to include payments to people who perform maintenance and repairs on the equipment that you own. You are also not required to report payments that you make to property managers, because they are not providing you with construction and building services. However, if you yourself are a property manager who pays plumbers and other building contractors, then you may be required to lodge a TPAR that reports these payments. You may wish to consult a tax professional to determine your obligation in this respect.

Which payments are exempt from the requirement ?

In addition to exceptions listed in the paragraph above, you are also not required to report payments you make that are solely for materials. The efforts of contractors who deliver the materials (for example, the driver of a concrete truck) are not considered to be reportable unless they provide an additional construction service. Furthermore, you are not required to report any payments you make to workers on a labour-hire basis, as long as you are withholding some of their pay according to the Pay As You Go (PAYG) provisions. If you made no payments to any contractors during the year, you may choose to complete a TPAR nil report online, but you are not required to do so. If you are no longer doing business in the construction and building industry at all, you should update your information in the Australian Business Register.

The purpose of the TPAR form is to provide the ATO with information on the income of individual contractors. The ATO will match the payment information you provide with the contractors’ own tax returns, in order to ascertain that the contractors are reporting their income accurately. For the complete regulations pertaining to the TPAR, you can visit the FAQ page for the TPAR on the Taxation Office website.

Other Insights from Pherrus

  • Accounting for Home Builders

    Accounting for Home Builders

    Could you build a structurally sound house without building plans? Impossible!  The same goes for your building business- running a successful company without proper accounting is impossible!  The construction industry contributed to 9% of all goods and services produced in Australia in 2022. This statistic highlights the industry’s significant role in the economy, meaning there’s …

    Accounting for Home Builders Read More »

  • blank

    Understanding the Changes in the NSW State Budget

    Following the announcement of the state budget for 2023-2024, you’re probably trying to get your head around the amendments that are relevant to you. Here are the main points to note: Changes to the Land Tax Exemption for a Principal Place of Residence A minimum ownership requirement is going to come into effect so that …

    Understanding the Changes in the NSW State Budget Read More »

  • Outstanding Business Tax Debt Pherrus

    Outstanding Business Tax Debt

    Last July, over 22,000 Australian businesses received warnings from the Australian Taxation Office for having tax debt over $100,000 that is more than three months late.  The ATO is on the hunt for a staggering $5 billion owed by businesses fitting this criteria. They’re setting a firm boundary to make things fair for everyone in …

    Outstanding Business Tax Debt Read More »