Contractor Payment Reporting Basics

If your business pays contractors and operates in certain industries, the ATO expects an annual report listing who you paid and how much: the Taxable Payments Annual Report, or TPAR. It exists so the ATO can match what businesses report paying contractors against what those contractors declare — and plenty of businesses discover the obligation only when a reminder letter arrives.

Who has to lodge

TPAR applies to businesses that pay contractors for services in these industries:

• Building and construction
• Cleaning
• Courier and road freight
• Information technology
• Security, investigation and surveillance

The catch is the mixed-business rule: you do not have to be a dedicated operator in one of these fields. If payments you receive for a relevant service make up 10% or more of your business's GST turnover, the reporting obligation can apply — the retailer that engages contractor delivery drivers is a classic example.

What gets reported

For each contractor you report their ABN, name, address and the gross amount paid for the year, including GST. Two mechanics trip people up. First, TPAR works on payments actually made during the year — an invoice dated June but paid in July belongs in next year's report. Second, not everything is reportable: payments purely for materials, wages to employees reported through payroll, and genuinely incidental labour can be left out — but a payment that mixes labour and materials is reported in full.

The deadline and how to lodge

The TPAR is due by 28th August each year, covering the financial year just ended. Most accounting software can build the report from supplier records, provided contractor payments were coded consistently through the year — which is really the whole game. Lodgement is electronic, through your software or your tax or BAS agent. If you had no reportable payments but the ATO is expecting a report from you, submitting a non-lodgment advice stops the reminder letters.

What we commonly see go wrong

• Contractor details never collected — chasing ABNs and addresses in August for payments made the previous September
• Reporting invoiced amounts instead of amounts actually paid
• Mixed businesses not realising the 10% rule catches them
• Assuming the software lodges it automatically — it prepares the data, but someone still has to lodge

When to get advice

If you are not sure whether your services fall within a listed industry, or how the mixed-business rule applies to you, it is worth confirming before the deadline. Late TPARs can attract failure-to-lodge penalties, and the fix is usually nothing more exotic than better supplier coding in your accounting file.

When is the TPAR due?

By 28th August each year, covering payments made in the financial year that ended on the previous 30th June.

Do I report payments to contractors who supplied only materials?

No — payments solely for materials are excluded, but if an invoice combines labour and materials you report the whole payment.

What happens if I lodge late or not at all?

The ATO can apply failure-to-lodge penalties and actively follows up non-lodgers, so if you have missed one it is better to lodge now, or submit a non-lodgment advice if nothing was reportable, than to wait.