TPAR: Which Clients Lodge and What Agents Collect

A TPAR is the taxable payments annual report, which tells the Australian Taxation Office (ATO) what a business paid contractors for certain services. Collect contractor details when you onboard the client, then report the payments actually made during the financial year.

What a TPAR is and Who Needs to Lodge One

A TPAR reports contractor payments by businesses covered by the taxable payments reporting system. A business receiving contractor income does not lodge a TPAR just because another business reports payments made to it.

The covered services are building and construction, cleaning, courier, road freight, information technology (IT) and security, investigation or surveillance. The business must meet the applicable industry test and pay contractors to provide relevant services on its behalf. The ATO’s reporting overview lists the service categories.

Mixed businesses need a calculation, not a decision based only on their business description. Cleaning businesses use a 10% business-income threshold. The ATO’s cleaning guidance includes services provided by employees when calculating that income.

For the other listed services, apply the exemption categories in LCR 2019/4. A category below 10% of current or projected GST turnover can be exempt. Courier and road freight are combined for that test. Assess other categories separately.

Building and construction has a different test. A business primarily operates in that industry if relevant services meet any of these conditions:

• At least 50% of its business income in the current financial year.
• At least 50% of its business activity in the current financial year.
• At least 50% of its business income in the previous financial year.

Use the ATO’s building and construction test alongside the actual contractor payments.

Government entities have separate reporting rules. Federal, state, territory and local government entities report relevant service payments. Federal, state and territory entities also report grants to ABN holders. Local government entities do not report grants under that rule. Confirm the payer’s obligations against the ATO’s government reporting guidance.

The income tests decide whether reporting applies. The business TPAR itself records money paid out to contractors.

Contractor vs Employee: Which Payments Go on the Report

Report payments to contractors for the relevant services. Employee wages belong in payroll reporting through Single Touch Payroll (STP). Use the separate STP finalisation guide for employee year-end work.

An ABN or an invoice does not prove that a worker is an independent contractor. For tax purposes, start with the legal rights and obligations agreed between the parties. The ATO’s TR 2023/4 explains the approach following the High Court’s 2022 decisions.

Where a valid written contract contains the complete agreement, assess its terms. Oral terms, changes to the agreement or a disputed contract can require further evidence. Read the ATO’s employee or independent contractor guidance before deciding a doubtful case.

Assess super separately. Some contractors paid mainly for their personal labour are employees for super guarantee purposes. The ATO’s super for independent contractors guidance links to its super guarantee eligibility decision tool. That tool addresses super eligibility, not every worker-classification question.

Leave materials-only payments off the business TPAR. Also exclude unpaid invoices, employee payments, private payments and contractor services outside the relevant reporting category. An invoice combining reportable labour and materials generally goes on the report in full.

Where no ABN was quoted, report the relevant payment and withholding through the appropriate annual report. The ATO permits reporting no-ABN withholding through TPAR or the separate withholding report, but prohibits reporting it in both.

Wrongly classifying an employee as a contractor can leave PAYG withholding and super unpaid. Correcting the TPAR alone does not resolve those obligations.

What TPAR Reporting Covers for Each Payment

For each contractor, collect the details needed to identify the payee and total the year’s payments:

• ABN, if known, including separate records where the ABN changes.
• Business name or individual name and address.
• Gross amount paid, including GST and any tax withheld.
• GST included in those payments.
• Tax withheld because an ABN was not quoted.

The ATO’s contractor details guidance sets out these fields. Retain invoices and payment records so each total can be traced.

TPAR uses a payments basis even when the client accounts for GST on an accruals basis. Include amounts actually paid during the financial year. An invoice outstanding at year-end belongs in the report for the year the client pays it.

In a fictional example, a cleaning business receives a contractor invoice before year-end but pays it after year-end. The payment goes in the following financial year’s TPAR. The invoice date does not move it into the earlier report.

Before generating the report, compare contractor names and ABNs with ABN Lookup. Resolve a mismatch with the contractor instead of changing the accounting record to a guessed name. The ABN checking guide covers the register check. Reconcile payment totals to bank records and the BAS preparation records without substituting accrual expense totals.

TPAR Due Date and How to Lodge

TPAR has an annual lodgement deadline after the financial year ends. Put the ATO’s TPAR deadline and lodgement guidance in your practice calendar. Plan around the ordinary deadline when acting as agent. Treat an approved deferral as a separate arrangement, not an assumed agent concession.

Choose a lodgement channel that matches the client and the file you prepare:

1. Lodge directly through Standard Business Reporting (SBR) enabled software where supported.
2. Use Online services for agents for an authorised client, including a compliant file upload where appropriate.
3. Businesses can lodge through Online services for business. Sole traders can also use ATO online services through myGov.

A software export must be the ATO-format data file. A PDF report is a review copy, not an electronic lodgement file. Retain the successful lodgement receipt and resolve any rejection.

In Xero, group contractor contacts, set TPAR rules by contact group and expense account, then run the report for the financial year. Review included transactions and fix missing contact details. Xero supports direct lodgement or an ATO-format export, subject to its supported reporting cases. Check the final lodgement status in the report history.

In MYOB Business, mark relevant suppliers and transactions for TPAR reporting. Run the Taxable payments annual report for the financial year and review each supplier’s payments. Create the taxable payments file, confirm business details and download it for electronic lodgement. AccountRight has its own reportable-payment settings, so use instructions for the client’s edition.

The former paper form is the Taxable payments annual report, NAT 74109. The ATO no longer accepts paper TPAR lodgements. Use an electronic channel instead of ordering an old form or printing a software PDF.

Clients Who Stop Needing a TPAR

Send TPAR non-lodgment advice when a client no longer needs to report. This is often called a TPAR not required notice or nil TPAR, but it is advice about the obligation.

The ATO’s non-lodgment advice guidance allows multiple years and a reason for not lodging. It can also advise that future reports are not expected. Retain the reference number and the reason in the client file.

Review every contractor-paying client’s status each year. A change in services, income mix or contractor use can bring a client into reporting or remove the obligation. Do not carry forward last year’s answer without checking the facts.

The ATO follows up missing reports and can apply failure-to-lodge penalties. Submit overdue reports where required, or non-lodgment advice where the obligation does not apply.

Collecting Contractor Details at Onboarding

Ask a new client what services it provides and whether it pays contractors to provide those services. Collect enough detail to apply the industry test before setting up the annual job.

Your onboarding questions can cover the following points:

• Which services does the business provide, including secondary services?
• Does it pay contractors or subcontractors for any of those services?
• Which accounting software holds supplier contacts, invoices and payments?
• Are contractor ABNs and addresses recorded?
• Which earlier financial years have lodged reports or non-lodgment advice?

Set up supplier contacts and TPAR reporting rules from the first month you handle the books. Record each contractor’s ABN and address, then flag the relevant payments. Include this in the wider bookkeeping client onboarding checklist.

Tax Genie lets your practice add industry and contractor questions to the client form. Tax Genie checks ABN format and register matches. You receive the information needed to assess TPAR before year-end and set up contractor records in the accounting file.

For a client with missing prior-year TPARs, establish which years required reporting and obtain the payment records. Tell the client in writing which reports are outstanding, what you need and who will lodge them. Record any missing information and agreed action. Submit non-lodgment advice for a year only when its facts support that outcome.

What to Tell Clients Before Year End

Send clients a reminder before year-end while they can still correct contractor records. Give them your document deadline and the official TPAR deadline link.

A reminder can use this wording:

Please send any missing contractor invoices and confirm each contractor’s ABN and address. We need payment records for the financial year, including GST and any no-ABN withholding. Your TPAR must be lodged by the ATO’s annual deadline. Please send these records by the date in your request so we can prepare the report.

If a supplier does not quote an ABN, withholding is generally 47% unless an exception applies. Resolve the ABN or exemption before paying. The ATO’s no-ABN withholding guidance explains the exceptions.

The ATO uses contractor-payment data to check declared income and other tax obligations. Ask clients to resolve missing records before you lodge, then retain the approved report and receipt with the supporting payments.