Over the busy holiday period, many businesses will begin to use more cleaning and courier contractors to cope with heavy demand.
As we have mentioned in a previous article, many businesses are now required to lodge a Taxable Payments Annual Report (TPAR). If you are a business that provides cleaning services, courier services or building and construction services, you will now need to lodge a Taxable Payments Annual Report (TPAR) to inform the ATO about your payments to contractors.
The term ‘contractors’ can include subcontractors, consultants and independent contractors. They may be operating as sole traders (individuals), companies, partnerships or trusts. The TPAR will need to be completed, even if you provide mixed services.
If you plan on increasing your usage of contractors over the silly season, it is important that you take the time to understand what a TPAR is and whether you will be required to lodge one.
What is a TPAR?
A TPAR informs the tax office about any payments that have been made to contractors for providing services.
If the total payments are 10% or more of your GST turnover (or if you are primarily in the building and construction industry) – you must lodge a TPAR.
Even if you are not registered for GST, you must still check if you need to lodge a TPAR. All businesses have a GST turnover, regardless of whether or not they are registered for GST.
If you provide cleaning or courier services and do not believe that you need to lodge a TPAR, because you have not made any payments to contractors, you will still need to lodge a nil report with the ATO.
Other businesses, beside cleaning and courier services, that must lodge a TPAR include:
- Building and construction services
- Road freight services
- Information technology (IT) services
- Security, investigation or surveillance services
- Mixed services (if the business provides multiple of the services outlined above).
When is the TPAR due?
Your TPAR will be due in late August 2020. Businesses can lodge their report either online or with a paper form.
The information that must be included is:
- The ABN of the contractor (if possible)
- The name of the contractor (either their personal name or business name)
- The address of the contractor
- The total figures for the financial year, including:
- Gross amount paid to them (incl. GST)
- GST paid to them
- Tax withheld if an ABN was not quoted.
Failure to lodge in time will often result in a penalty, so if you require any assistance, now is the best time to contact a small business tax professional.