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  • Cleaning services

    If you're running a business providing cleaning services (even if it's only part of the services you provide) you must lodge a Taxable payments annual report (TPAR) for each financial year you:

    • have an Australian business number (ABN)
    • make any payments to contractors for cleaning services they provide on your behalf.

    If your business provides mixed services, not just cleaning, you may need to lodge a TPAR if the payments you receive for cleaning services make up 10% or more of your total GST turnover.

    You must reassess whether you need to lodge a TPAR each year.

    Your first TPAR for payments made to contractors from 1 July 2018 to 30 June 2019, will be due by 28 August 2019.

    To make it easier to complete your TPAR, you should check the way you currently record information about your payments to contractors.

    On this page:

    See also:

    What are cleaning services?

    Cleaning services include, but are not limited to, any of the following activities undertaken on a building, residence, structure, place, surface, transport/vehicle, industrial machinery or equipment and for events:

    • interior cleaning
    • exterior cleaning (except sandblasting)
    • carpet cleaning
    • chimney cleaning
    • gutter cleaning
    • road sweeping and street cleaning
    • swimming pool cleaning
    • park and park facilities cleaning.

    ‘Events’ include staging of sporting, cultural, scientific, technological, agricultural or entertainment events and exhibitions.

    ‘Transport/vehicles’ includes trains, trams, buses, ferries, airplanes, ships, trucks, cars and other motor vehicles.

    Businesses providing mixed services

    If cleaning services are only part of the services your business provides, you will need to work out what percentage of the payments you receive are for cleaning services each financial year to determine if you need to lodge a TPAR.

    If the total payments you receive for cleaning services are:

    • 10% or more of your GST turnover - you must lodge a TPAR
    • less than 10% of your GST turnover - you don't need to lodge a TPAR.

    You can choose to lodge a TPAR even if you think you don't need to. For example, if you aren't sure if your payments for cleaning services will amount to less than 10% of your GST turnover for the financial year you should ensure you are recording the payments you make to contractors anyway - you can still choose to lodge a TPAR even if you're under the 10% threshold.

    To work out if you need to lodge a TPAR, use the following three steps:

    Step 1: Calculate your total payments received for cleaning services

    Add up all the payments your business received for cleaning services during the financial year, regardless of whether an employee or a contractor performed those services on your behalf.

    Don't include payments:

    • you make to contractors for providing these services on your behalf
    • where the cleaning services provided are merely ancillary or incidental to the goods or other services your business provides.

    Step 2: Calculate your relevant GST turnover

    If you have been operating your business for:

    • the full financial year - use your actual GST turnover for the year
    • less than 12 months of the financial year - you must use your projected GST turnover by working out what your GST turnover will be for the next full financial year.

    Your GST turnover is your gross business income (not your profit) excluding any:

    • GST you included in sales to your customers
    • sales that are not for payment and are not taxable
    • sales not connected with an enterprise you run
    • input-taxed sales you make
    • sales not connected with Australia.

    Step 3: Calculate what percent of your GST turnover is from cleaning services

    You can calculate this percentage by using the following formula each financial year:

    Total payments received for cleaning services
    ________________________________________
    Total relevant GST turnover 


    x 100

    If 10% or more of your GST turnover for the financial year is from cleaning services and you've also made payments to contractors for cleaning services during the year, you must lodge a TPAR.

    Examples

    The following examples demonstrate the meaning of providing cleaning services and whether or not a business providing these services needs to lodge a TPAR.

    Example: A business providing cleaning and other services

    Jehan and Bhuvan Building Services (JBBS) has an ABN and provides a range of building maintenance services, including office cleaning.

    They use both employees and contractors to perform the office cleaning work.

    Their business has been operating for the full financial year so they can use their actual GST turnover rather than work out a projected GST turnover amount.

    They work out the following amounts for the 2018–19 financial year:

    • total GST turnover for JBBS = $100,000
    • total payments received by JBBS for cleaning services = $10,000
    • total payments JBBS paid to contractors = $5,000
    • total payments JBBS paid to employees = $6,000

    To work out if they need to lodge a TPAR, JBBS perform the following calculation:

    $10,000
    (Total payments received for cleaning services)
    ________________________________________
    $100,000
    (Total relevant GST turnover) 



    x 100 + 10%


    JBBS have determined they must lodge a TPAR as the payments they received for cleaning services ($10,000) represent 10% of its total GST turnover for that year ($100,000).

    They need to report the total amounts (adding up to $5,000) that they paid to each of their contractors for cleaning services in their 2018–19 TPAR. They don't include the $6,000 for payments made to their employees because the TPAR is for reporting payments to contractors only, not employees.

    Example: A business selling cleaning products and occasionally providing cleaning services

    Cleaners & All 123 has an ABN and sells cleaning products. Occasionally, customers that purchase their cleaning products also engage them to provide cleaning services.

    Cleaners & All 123 hires contractors to provide the cleaning services for these customers.

    At the end of the financial year, if the total payments Cleaners & All 123 receives for cleaning services are 10% or more of their total relevant GST turnover, Cleaners & All 123 must report the payments they make to contractors for cleaning services in a TPAR.

    Example: A business providing gardening services

    Efficient Gardening Pty Ltd is a business with an ABN that offers gardening services to homes across Australia, such as trimming, hedging and weed control.

    Efficient Gardening pays contractors to provide these gardening services on its behalf.

    As part of the gardening services Efficient Gardening provide, the contractors sweep and clean clients’ verandas and pavements to remove all plant and shrub cuttings, weeds and dirt.

    The cleaning services provided are ancillary or incidental to the gardening services, so Efficient Gardening isn't providing a cleaning service and aren't required to lodge a TPAR.

    Example: A business providing cleaning and other services

    Highlight Management Pty Ltd is a business with an ABN that provides a wide range of services including event management, catering, corporate training and cleaning.

    Highlight Management has an agreement with an industry association to manage a five day industry forum event. The agreement specifies that Highlight Management will provide and manage the IT equipment for the event venue, provide chauffeurs for high profile attendees, provide daily catering, and ensure the venue is cleaned at the end of each day.

    The cleaning services Highlight Management provides are not ancillary or incidental to the other services because Highlight Management was engaged specifically to supply a cleaning service to the industry association as part of their agreement.

    Highlight Management engages contractors to provide the cleaning services for the event on their behalf.

    At the end of the financial year, if the total payments Highlight Management have received for cleaning services is more than 10% or more of their total relevant GST turnover they will be required to report payments to contractors that provided cleaning services in a TPAR.

    Example: A business that has been operating for less than 12 months

    Alphonso Cleaning Agents Pty Ltd is a cleaning agency with an ABN that pays contractors to supply cleaning services to customers in Adelaide. They have only been operating for 6 months by the time the 2018–19 financial year ends.

    Therefore, they are required to determine their projected GST turnover for the 2019–20 financial year when working out if they need to lodge a TPAR.

    Alphonso Cleaning Agents expect their projected GST turnover for 2019–20 will be $90,000. The payments they received for cleaning services in the 2018–19 financial year amount to $36,000. This represents 40% of their projected GST turnover for the 2019–20 financial year.

    Therefore Alphonso Cleaning Agents are required to lodge a TPAR for the 2018–19 financial year to report the payments they make to contractors for cleaning services.

    Example: A cleaning business only hiring one contractor in a financial year

    Clean Faster Pty Ltd has an ABN and supplies cleaning services to clients in Darwin.

    Clean Faster has several full-time employees which it uses to provide cleaning services to clients. In the 2018–19 financial year, Clean Faster did not hire any contractors to provide cleaning services, so it's not required to lodge a TPAR in 2018–19.

    In the 2019–20 financial year, one of Clean Faster’s employees went on maternity leave, so Clean Faster engaged a contractor to fill in and provide cleaning services until that employee returned to work.

    Clean Faster is required to report the payments it made to the contractor in a TPAR for the 2019–20 financial year.

    Example: A cleaning business reporting contractor payments for labour and materials

    Cleanest Management Pty Ltd is a cleaning business with an ABN that supplies cleaning services.

    Cleanest Management is engaged to clean a school and hires a contractor to undertake this work. As part of the agreement, the contractor is required to provide their own cleaning products, for which they on-charge to Cleanest Management.

    At the end of the month the contractor provides Cleanest Management with a tax invoice for $3,300 (GST inclusive) for their cleaning services and cleaning products purchased. Over the year this amounts to payments totalling $39,600.

    Cleanest management will need to include the total amount of $39,600 when reporting the payments they've made to this contractor on their TPAR.

    End of example

    Authorised by the Australian Government, Canberra 

    Last modified: 04 Oct 2018QC 56821