If your business pays contractors for services, you might need to. Here’s the latest
Tax compliance can be one the most complex, and time-consuming responsibilities of running a business. It really is a full-time job to stay up to date with the latest tax regulations and requirements. Since its launch in 2012, the ATO’s interest in service industries has only increased. Today, multiple service industries are included. Therefore, more businesses who pay contractors in these industries must lodge a TPAR annually. Does your business engage contractors for services during the financial year? Read on to learn more about what TPAR is and if you’re required to lodge one.
What is a TPAR?
A Taxable Payments Annual Report (TPAR) may need to be lodged by a business, or government entity, that pays contractors during the financial year. This includes sub-contractors, consultants and independent contractors. Contractors can be sole traders, companies, partnerships or trusts. If your business is required to lodge a TPAR, it’s due to the ATO by 28 August.
Which industries require a TPAR?
In 2012, a TPAR was only required for payments made to contractors in the Building & Construction industry. This industry covers a huge range of occupations and work activities such as:
|Architectural work||Decorating||Many forms of installations works|
|Asphalt & bitumen work||Demolition||Landscaping|
|Assembly, installation, or erection of prefabricated houses||Drainage work||Painting|
|Cabinet making & joinery||Elevator and escalator work||Rendering|
|Construction & sealing roads||Flooring||Wallpapering|
|Construction management||Glazing||And many more|
The annual TPARs have proven to be successful at validating ABNs, tracking cash and non-cash payments for the ATO. As such, the number of industries affected grows each year. The latest list includes:
- Building & Construction
- Road Freight & Courier
- Information Technology
- Security, Investigation or Surveillance
As the ATO continues to target businesses who make cash payments to contractors, the number of industries on this list is likely to grow. The TPAR enables the ATO to track down those who have under-claimed revenue, and as such, are underpaying tax. It’s a tax compliance issue that must be attended to if your business meets the criteria to report.
What industry might be targeted next?
So which industries do we think will be targeted next by the ATO? We think it will head to the creative industries, where often smaller freelance contractors are engaged and some (whilst amazingly talented in their creative artistry) are not aware of their ATO reporting obligations around ABNs, GST and PAYG instalments.
Time will tell if our crystal ball is correct!
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