COVID-19 could mean more clients take on a TPAR obligation

Operators in some Australian industries as well as select government entities are required by the ATO to lodge a taxable payments annual report (TPAR), generally by 28 August each year. These reports let the ATO know about payments that are made to contractors for providing services. Contractors can include subcontractors, consultants and independent contractors, and they can be operating as sole traders (individuals), companies, partnerships or trusts.

Different industries have been gradually brought into the TPAR fold, with this year’s inductees being security, investigation or surveillance services; information technology (IT) services; and road freight services. They join building and construction, cleaning, and courier services.

But the ATO is warning that as a result of the economic conditions COVID-19 is imposing on many businesses, a previously unforeseen result has been the uptick in the use of contracted service providers.

ATO Assistant Commission Peter Holt says that many restaurants, cafés, grocery stores, pharmacies and retailers have started paying contractors this year to deliver their goods to customers as a result of COVID-19. “These businesses may not have previously needed to lodge a TPAR. However, if the total payments received for these deliveries or courier services are 10% or more of the total annual business income, you’ll need to lodge.”

The TPAR system was initially introduced to address longstanding compliance issues the ATO had identified in the tax affairs of contractors. Tax compliance issues that were identified included non-lodgment of tax returns, income being omitted from tax returns that were lodged, non-compliance with GST obligations, failure to quote an ABN, and use of an invalid ABN.

The ATO says that as at late July 2020, more than 16,000 businesses have already lodged a TPAR for 2019-20, or told the ATO that they’re not required to lodge. The ATO expects more than 280,000 businesses to complete a TPAR for 2019-20.

“The good news is that the contractor details you need to report on the TPAR are usually on the invoices used to claim GST credits on your BAS,” Holt says, “so you may find that once you lodge your BAS, you can tick your TPAR off your list shortly after.”

You can tell your affected clients that there are four options to lodge online:

  • check if the business accounting software they use can create and lodge the TPAR (talk to the software provider if not sure)
  • complete and lodge the TPAR through the ATO’s Business portal
  • individuals and sole traders can lodge using a myGov account linked to the ATO
  • or of course their friendly registered tax professional can also lodge the TPAR on their behalf.

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