If you’re a contractor, tax time may be a little easier this year. Pre-filled Taxable Payments Annual Report (TPAR) data has been made available for the first time.
The change means certain contractor payments reported to the ATO will automatically appear in the returns of eligible sole traders or contractors. The inclusion of pre-filled data aims to help streamline the tax return lodgment process , but it also highlights the importance of understanding your TPAR obligations and checking that pre-filled information is accurate before you lodge.
Refresher on TPAR
A TPAR is an annual reporting obligation that applies to businesses making payments to contractors or subcontractors for services that fall under the Taxable Payment Reporting System (TPRS).
Services that come under the TPRS are building and construction; cleaning; courier and road freight; information technology (IT); and security, investigation and surveillance.
The ATO collects TPAR information about contractor payments as part of its compliance activities, allowing the ATO to identify contractors who don’t meet their tax obligations, ensure they correctly report their income, and ensure businesses aren’t disadvantaged by competitors that don’t declare all of their income.
TPAR obligations for businesses engaging contractors
If your business operates in the relevant industries, you may be required to lodge a TPAR if you make payments to contractors or subcontractors for services covered by the reporting rules. Whether your business must lodge depends on its circumstances and the nature of its activities.
If your business needs to a report, the annual TPAR due date is 28 August.
Don’t forget: the ATO is no longer accepting paper TPAR lodgments. All reports must be made through electronic channels: via the ATO’s online services for businesses, individual and sole traders; using SBR-enabled software; or through a registered tax practitioner.
If your business doesn’t need to lodge a TPAR for a particular financial year, you should submit a non-lodgment advice (NLA) form.
If you run a business and you’re uncertain whether you need to lodge a TPAR, review your obligations well before the deadline. Leaving reporting until the last minute can increase the risk of errors and create issues for contractors who may be relying on that information appearing in pre-fill services later in the tax season.
What contractors need to know
The introduction of TPAR pre-fill is designed to help you, as a contractor, prepare more accurate returns by automatically including reported payment information in eligible tax returns.
However, pre-fill information should be viewed as a starting point rather than a complete record of income. Compare any pre-filled amounts against your records before lodging. Income earned from other sources may not be captured through the TPAR system and may still need to be added manually. You remain responsible for ensuring that all your assessable income is correctly reported.
Timing is important. As businesses have until 28 August to lodge their TPAR, if you lodge too early, you may find that not all payment information has pre-filled. Waiting until after that date could reduce the likelihood of needing to amend a return later.
If you’re a contractor that accounts for income on an accrual basis, be aware that TPAR information is reported on a cash basis. As a result, the amounts shown in pre-fill may not always align with your business accounting records, making it important to review any discrepancies before lodging.
Talk to us
If you run a business and are unsure of your TPAR reporting obligations, or if you’re a contractor who’s found inconsistencies between the pre-filled information and your records, talk to us before you lodge. We can help you get it right.