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  • Payments and details you need to report

    You must report the payments you actually made for the financial year.

    The basic details you need to record about each of your payees are the same for everyone, but the payments you need to report on your Taxable payments annual report (TPAR) depend on whether you are a business or a government entity.

    On this page:

    Payee details you need to report

    The details you need to report about your contractors are generally contained in the invoices or grant applications you receive from them.

    The details you need to report for each payee include the:

    • ABN (where known)
    • name (business name or individual's name)
    • address
    • total amounts for the financial year of the:  
      • gross amount paid (including GST plus any tax withheld)
      • total GST you paid them
      • total tax withheld where ABN was not quoted.

    Additionally, if you are a government entity, you will also need to report:

    • whether a Statement by a supplier was provided
    • details of any grants paid to people or organisations that have an ABN, including the:  
      • date the grant was paid
      • name of the grant or grant program.

    When you receive an invoice, check that the ABN on the invoice matches the ABN on your record for that contractor. Ensure you create a new contractor record if necessary. Where a contractor's ABN changed during the year, you will need to include each ABN for that contractor in your report.

    You can check your contractors' details including ABN, name and GST registration to confirm they are correct by using ABN LookupExternal Link on the ABR website or the ATO app

    Depending on whether you lodge the paper form or lodge online, we may ask you to include additional information where it is known to you. This additional information may include the contractor’s phone number, email address and bank account details (where they are paid by electronic bank transfer).

    See also:

    Payments businesses need to report

    You need to report payments made to contractors for certain services.

    If you are a business supplying:

    If an invoice you receive from a contractor includes both labour and materials, whether itemised or combined, you must report the total amount of the payment, unless the labour component is only incidental.

    Payments businesses don't need to report

    There are some payments you don't report on the TPAR. These include:

    Payments for materials only

    You are not required to report payments if the invoices are for materials only.

    If you pay a contractor for invoices for both materials and labour, and at other times pay the same contractor for materials only, it can be difficult to work out the payments made for materials only. In this situation, you can choose to report all the payments you make to this contractor.

    Incidental labour

    Where invoices you receive have amounts for both materials and labour, you can exclude the labour amount if it is incidental to the supply of the materials.

    A payment for labour is considered to be incidental if the labour component is immaterial to the actual supply of the material.

    Example: Incidental labour component

    Kevin purchases a stock of new taps from Harry's Hardware to install in a commercial building. Harry installs one tap by way of demonstration, so that Kevin knows how to install the rest.

    Harry's Hardware invoices Kevin for the taps and includes a small amount for the labour to demonstrate the installation. Kevin does not need to report the payment he makes to Harry's Hardware because the labour component of installing the tap is incidental to the supply of the materials.

    End of example

     

    Example: Not incidental labour component

    An electrical business provides labour and materials for various electrical applications.

    A builder pays the electrical business for the supply and installation of wiring in a commercial fit-out he is managing.

    As the provision of the installation service is a building and construction activity and more than incidental to the supply of materials, the builder will be required to report the total payment made to the electrical business. The builder is carrying on a business that is primarily in the building and construction industry.

    End of example

    Unpaid invoices as at 30 June each year

    Only report payments that have been paid on or before 30 June each year.

    For example, if you receive an invoice in June but you don't pay that invoice until sometime in July, you will report that payment in the next financial year (the year in which you actually paid it).

    PAYG withholding payments

    Report pay as you go (PAYG) withholding payments in your PAYG withholding annual report, not your TPAR. Examples include payments to:

    • employees
    • workers engaged under a voluntary agreement to withhold
    • workers engaged under a labour-hire or on-hire arrangement. This includes a labour hire firm that hires workers under a labour-hire arrangement to provide services.
    • foreign residents for work performed in Australia. These payments are generally subject to PAYG foreign resident withholding. (If the payments are not subject to PAYG withholding, then you need to report them in the TPAR).
    • foreign residents for work performed overseas.

    Contractors who don't quote an ABN

    If an ABN isn't provided, you must withhold under the PAYG withholding arrangements.

    You can report these amounts withheld in either the:

    • TPAR, or
    • PAYG withholding where ABN not quoted – annual report.

    Only report this information in one of these annual reports, not both.

    See also:

    Payments within consolidated groups

    If you’re in a consolidated, or multiple entry consolidated group for income tax purposes, you don’t need to report payments you make to another member of that same group.

    This is because members of a consolidated group, or multiple entry consolidated group, are effectively taxed as a single entity. You only need to report payments to contractors for services who are outside the consolidated group.

    Example: Payments to contractors within a consolidated group

    Brick Co and Paint Co are both members of the same consolidated group for income tax purposes.

    Brick Co provides building services and makes a payment to Paint Co for painting its building project. Because Paint Co and Brick Co are in the same consolidated group, Brick Co won't have to report on the payment made to Paint Co for the provision of painting services.

    However, Brick Co will have to report on payments made to entities outside the consolidated group for the supply of building and construction services.

    End of example

    Payments for private and domestic projects

    You don't need to report if you are:

    • an individual not running a business and you make payments to contractors for services – for example, if you are a homeowner building or renovating your own home
    • a business making payments to contractors for services for private purposes – for example, cleaning your own home.

    If the work is in relation to carrying on a business, the amounts paid to the contractors for this work need to be reported. These are payments for which businesses can claim a tax deduction (for example, payments to contractors).

    Example: Homeowner paying for building and construction services

    Kristyn, who has an ABN for the purposes of running a bookkeeping business, manages the construction of her new home and makes payments directly to the contractors.

    Kristyn won't be required to report payments she makes to contractors because she is undertaking the activity in a domestic capacity, not as a business.

    John is a builder and runs SF Builders as a sole trader. He is currently doing renovations on his own house and has engaged ML Carpets to handle the installation of new carpet.

    As this renovation is private and not part of John’s or SF Builders’ business, the payments he makes to ML Carpets are not reportable.

    Example: Mixed personal and business payments in the cleaning industry

    Svetlana is a sole-trader with an ABN who runs her own cleaning agency.

    Clients contact her asking for their homes and offices to be cleaned. Svetlana keeps a list of contract cleaners she engages and pays for each cleaning job.

    Svetlana asks one of these contractors to clean her own home and pays the contractor for this from her personal bank account.

    Svetlana is required to report the payments made to contractors that undertake cleaning services for her clients. However, Svetlana is not required to report the payment made to the contractor for cleaning her own home, as this is a payment made by Svetlana in her private capacity and not as part of her business.

     Example: Land owner paying a project manager

    Maya owns land and has engaged a project manager George to manage the development of a building on her land.

    Maya's business activity is purchasing and selling property. Maya is not carrying on a business primarily in the building and construction industry, and therefore is not required to report payments she makes to George.

    Example: Payments to property managers

    Jim only purchases properties for rental purposes and engages a property manager. Jim is not required to report the payments he makes to the property manager because he is not carrying on a business that is primarily in the building and construction industry.

    Susan is a property manager and pays a plumber to fix a burst water pipe on a property. The property manager’s business activity is managing investments, they aren't considered to be a business that is primarily in the building and construction industry. As a result, Susan doesn't need to report the payments made to the plumber.

    However, if Susan creates a separate entity to manage the building maintenance of the property, this entity will need to report the payments to the plumber – this is because the separate entity is considered to be primarily in the building and construction industry.

    End of example

    Payments and grants government entities need to report

    As a government entity, you need to report:

    If you are a local government entity you are not required to report grants.

    You are not required to provide recipients of payments or grants any details of the information reported. However, you can choose to provide them with the details if you wish.

    Payments, wholly or partly, for services

    You need to report payments you make, wholly or partly for services. This includes payments you make to overseas suppliers and governments.

    If invoices you receive include both goods and services, whether itemised or combined, you report the whole amount of the payment, unless the supply of the services is incidental to the supply of goods.

    Services can include actions that:

    • a business performs
    • may provide assistance to you or help you
    • may be performed on goods or in conjunction with the supply of goods
    • are performed in the course of trade or commerce
    • are generally performed under a contract, but not an employment contract.

    Example : Sunshine Meadows Council

    Sunshine Meadows Council, a local governing body, orders 1,700 black pens from an office supply company and pays an additional fee for delivery. Delivery of the pens constitutes a service. However, since this service has been provided incidentally to the provision of the goods, it does not need to be reported.

     Example: Councillor sitting fees and allowances

    City Council, a local governing body, pays a councillor meeting attendance fees and allowances for services they provided to the council. City Council does not apply the PAYG withholding provisions to these payments.

    Payments to the councillor are considered to be payments wholly or partly for services and need to be reported in City Council’s taxable payments annual report

     Example: Property management services

    Department ABC uses the services of an external property manager, Property Fix Services Pty Ltd to undertake various property management functions.

    Payments to Property Fix Services Pty Ltd are considered to be a payment wholly or partly for services and needs to be reported. 

     Example: Property manager engaging contractors – paying from own funds

    Property Fix Services Pty Ltd (who is paid by Department ABC) engages contractors to provide property management services. Property Fix Services Pty Ltd pays the contractors from their own funds. Property Fix is not a government entity and therefore not required to lodge an annual report.

     Example: Property manager engaging contractors – paying from government entity funds

    Department ABC requests major changes to one of their buildings managed by Property Fix Services Pty Ltd. Department ABC puts funds into a bank account they operate which is available to Property Fix Services Pty Ltd to pay for works and contractors.

    Payments to these contractors are considered to be from Department ABC and need to be reported in the department's annual report.

    End of example

    See also:

    Grants paid to people or organisations

    Local government entities are not required to report grants.

    Federal, state and territory government entities only need to report grants paid to people or organisations that have an ABN. This includes grants that are paid to non-profit organisations that have an ABN.

    You don’t need to report grants paid to individuals who don’t have ABNs and grants paid to other government entities.

    Grants can take a variety of forms and include subsidies, rebates, sponsorships and similar arrangements.

    Some factors that indicate a transaction is a grant include:

    • grants may be explicitly tied to a government policy or goal
    • grants may be disbursed on a one-off or longer-term basis, but aren't provided as ongoing, permanent funding
    • recipients are usually required to submit applications to receive grants
    • grants typically, but do not always, have conditions attached, such as reporting obligations or the requirement to include government logos on marketing materials
    • unlike loans, grants typically don't have to be repaid.

    You can refer to your jurisdiction’s financial management guidance on what grant programs are currently considered to be grants. For example, federal government entities may refer to the Commonwealth grants rules and guidelines.

    If multiple grant payments were made:

    • under the same grant program name, to the same business in a financial year, each payment may be reported separately or added together. If added together, the date of the grant payment can be reported as the end of the relevant financial year (for example, 30 June 2018).
    • under different grant programs to the same business in a financial year, the total of the payments made in the relevant financial year under each program name must be reported separately.

    Example : Small business acceleration program

    A state government Department of Industry administers a small business acceleration program. This program involves a series of grants and rebates paid to small businesses in the state to promote investment in business and support the economy. To be eligible for the program, small businesses must apply to the Department of Industry, carry on a business in the state and meet certain selection criteria.

    Fresh Paws Pty Ltd, a dog washing business located in the state, applies for a grant under the program. As part of its application, Fresh Paws provides its ABN and other documents to meet the conditions of the grant program. Fresh Paws meets the eligibility criteria and is successful in receiving the grant. The Department of Industry must report this grant on the TPAR.

    Tech Specialists Pty Ltd, a business teaching computer skills to the elderly located in the state, purchases five tablet computers for use in its business. It applies for a rebate under the program for the cost of the computers. As part of its application, Tech Specialists provides its ABN and includes the invoices as proof of its expense. Tech Specialists meets the eligibility criteria and is successful in receiving the rebate. The Department of Industry must report it on the TPAR.

    XYZ Business Pty Ltd receives $1,000 in grants in the financial year ending 30 June 2018 and this amount is made up of $500 from Grant Program A and $500 from Grant Program B. The amounts of $500 must be reported separately under their respective grant program names in the report.

    End of example

    Payments government entities don't need to report

    You don’t need to report payments that are:

    • for goods only, which includes any form of tangible property
    • made to other Australian government entities
    • made electronically by  
      • BPAY®
      • recurring direct debit
      • credit or debit card
      • third-party payment processors facilitating any of these methods
       
    • for telephone and internet services
    • for electricity, water, sewerage or gas
    • for transportation of employees, including airfares, taxi fares, train or bus fares or fares for water transport
    • for insurance
    • for accommodation in commercial premises – for example, rent payments
    • for accommodation in a hotel, motel, inn, hostel, boarding house, caravan park or camping ground
    • for a lease of goods
    • for the creation, grant, transfer, assignment or use of a right under licence, for example, a licence to use a software product
    • for financial supplies, for example, bank fees
    • for membership to a professional association or body
    • for services relating to court or tribunal functions, like payments to jurors, witnesses or advocates for minors.

    You should speak to your software provider on how best to exclude these payments from your report. However, we will accept these types of payments if it imposes an increased administrative burden to exclude them.

    Unpaid invoices as at 30 June each year

    Only report payments that have been paid on or before 30 June each year. For example, if you receive an invoice in June but you don't pay that invoice until sometime in July, you will report that payment in the next financial year (the year in which you actually paid it).

    PAYG withholding payments

    Report pay as you go (PAYG) withholding payments in your PAYG withholding annual report, not your TPAR. Examples include payments to:

    • employees
    • workers engaged under a voluntary agreement to withhold
    • workers engaged under a labour-hire or on-hire arrangement. This includes a labour hire firm that hires workers under a labour-hire arrangement to provide services.

    Payees who don't quote an ABN

    If an ABN isn't provided, you must withhold under the PAYG withholding arrangements.

    You can report these amounts withheld in either the:

    • TPAR, or
    • PAYG withholding where ABN not quoted – annual report.

    Only report this information in one of these annual reports, not both.

    See also:

    Last modified: 04 Oct 2018QC 51596