Are you in the building and construction industry? Are you in the courier or cleaning industry?
If your business falls under any of these industries you likely engage with contractors, and therefore the Taxable Payments Reporting System (TPRS) obligations should be on your radar at this time of year.
The TPRS was originally introduced to better track whether contractors in the building and construction industry were meeting their individual taxation obligations. The government has now expanded this to include the courier and cleaning industry. So businesses in these industries are required to record and report on the payments made to each separate contractor during the year.
Below is a more detailed description of the industries affected by the TPRS and what needs to be reported.
Industries required to report under the TPRS
- Building & Construction – this includes services such as bricklaying, plumbing, fencing and it also includes architectural work, decorating, engineering and landscaping construction. See the full list of building & construction services here.
- Courier (from 1 July 2018 – first reported in August 2019)
- Cleaning (from 1 July 2018 – first reported in August 2019)
Further industries are being considered for the TPRS and were mentioned in 2018-19 budget. These include security providers and investigative services, road freight transport, and computer system design and related services from 1 July 2019.
How do businesses report contractor payments?
This is done via a Taxable Payments Annual Report (TPAR), which tells the ATO about payments you have made to contractors for providing services and is to be completed and lodged with them by 28 August of each year.
The term contractor can include subcontractors, consultants and independent contractors. These contractors can be operating as sole traders, through a company, trust or partnership.
Payments you are required to report in the TPAR
The information you are required to report in the TPAR for each contractor needs to fall within the financial year (1 July – 30 June), and is generally found in the invoice you receive from them:
- ABN of the contractor engaged
- Name & Address of the contractor
- Gross amount paid to the contractor (including GST, if any)
Payments you are not required to report in the TPAR
There are certain payments that are not required to be reported with a TPAR, these include:
- Payments for materials only (if the payment is for labour and materials you must report the whole amount)
- Any invoices that you have received but have not paid as at 30 June each year
- Payments to employees
- Payments for private/domestic projects – for example payments you make for building or renovating your own home
The TPRS is ever-changing, and as mentioned above, new industries are being included within the reporting obligations for the 2019 and 2020 financial years.
Make sure your business is complying with its reporting obligations. Get in touch with our team at BLG Business Advisers online or by calling (02) 4229 2211.