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  • Cleaning services

    If your business provides any cleaning services (even if cleaning services are only part of the services you provide), you may need to lodge a Taxable payments annual report (TPAR).

    You will need to lodge a TPAR each financial year that:

    • you make payments to contractors for the cleaning services they provide on your behalf
    • the total amount you charge your customers and clients for cleaning services is 10% or more of your business income for the year
    • you have an Australian business number (ABN).

    You need to report these payments to us on the TPAR by 28 August each year.

    What are cleaning services?

    Cleaning services include, but are not limited to:

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

    Example 1: Cleaning business paying contractors for cleaning services

    John and Betty Cleaning Services has an ABN and cleans office buildings and schools in their local area. From time to time, they hire contractors to do some of the cleaning for them.

    As a cleaning business, John and Betty Cleaning Services will need to report all payments they make to contractors that undertake cleaning services for them.

    End of example

     

    Example 2: A business providing cleaning and other services

    Khan Building Services (KBS) provides a range of building maintenance services, including carpet cleaning.

    KBS uses five separate contractors to perform some of the carpet cleaning on their behalf.

    As KBS pay contractors to provide cleaning services on their behalf, charge their customers and receive income for cleaning services, KBS need to work out if they need to lodge a TPAR.

    They work out the following amounts for the financial year:

    • total business income for KBS = $100,000
    • total income received by KBS for cleaning services = $10,000
    • total payments KBS paid to employees = $6,000.

    Then they calculate the percentage as follows:

    • total payments received by KBS for cleaning services ($10,000) divided by total business income ($100,000)
    • $10,000 divided by $100,000 × 100 = 10%.

    KBS need to lodge a TPAR as the payments they received for cleaning services was 10% of its total business income for that year.

    KBS will need to complete a TPAR with the identification details and total amount paid to each contractor.

    They don't include the $6,000 for payments made to their employees because the TPAR is only for reporting payments to contractors.

    End of example

    Next steps:

    Courier or road freight services

    If your business provides any courier or road freight services (even if courier or road freight services are only part of the services you provide), you may need to lodge a Taxable payments annual report (TPAR).

    You will need to lodge a TPAR each financial year that:

    • you make any payments to contractors for the courier or road freight services they provide on your behalf
    • the total amount you charge your customers or clients for courier and road freight services is 10% or more of your business income for the year
    • you have an Australian business number (ABN).

    You need to report these payments to us on the TPAR by 28 August each year, noting that:

    • courier services must be reported from 1 July 2018 onwards
    • road freight services must be reported from 1 July 2019 onwards.

    2018–19 financial year only

    For the 2018–19 financial year only, report payments you made to contractors for courier services. You don't need to report payments to contractors for road freight services for that year.

    You'll need to work out if the total income you received from courier services in 2018–19 is 10% or more of your total business income for that year.

    1 July 2019 onwards

    For financial years from 1 July 2019 onwards, report courier and road freight services.

    You'll need to work out if the total income you receive from courier and road freight services is 10% or more of your total business income each year.

    What courier services are

    Courier and delivery services include activities where items or goods are collected from, or delivered to, any place in Australia whether by:

    • car
    • truck
    • station wagon
    • van
    • ute
    • motorcycle
    • motorised scooter
    • bicycle or other non-powered means of transport, including on foot.

    Courier or delivery services include:

    • door-to-door services for specialty deliveries of small parcels or packages
    • goods commonly transported using courier services such as parcels, packages, letters, food and flowers.

    Courier or delivery services don't include:

    • delivery of goods that your business provides where delivery is the only method your clients or customers have of receiving the goods – that is, they do not have a shopfront presence for you to pick up the goods
    • passenger transport services – for example, buses and taxis.

    What road freight services are

    Road freight services include:

    • transportation of freight by road
    • the renting of trucks with drivers for road freight transport
    • road vehicle towing services.

    Transportation of freight by road is the transport by road of:

    • goods
    • wares
    • merchandise
    • material, whether in its raw state or natural state, wholly or partly manufactured, or of a solid, liquid gaseous nature or otherwise
    • livestock.

    Typically, road freight is used to transport goods in bulk using large vehicles. Examples include:

    • furniture removal services
    • log haulage services
    • road freight forwarding services
    • taxi truck services
    • truck hire services (with driver).

    Road freight services don't include:

    • passenger transport services (such as buses and taxis)
    • operation of road freight terminals
    • providing crating and packing for road freight transport
    • leasing or hiring trucks without drivers.

    Example 1: Business in the courier or road industry paying a contractor for courier or road freight services

    • DEMT Couriers Pty Ltd is a business with an ABN that provides parcel and delivery services to a range of clients.
    • DEMT uses four contractors throughout the year to make deliveries.
    • Lee is one of these contractors and gives DEMT an invoice for the deliveries he completes.
    • As a provider of courier services, DEMT will need to report all payments it makes to contractors that undertake courier services for them, including Lee.

    This information must be reported to the ATO in a TPAR.

    End of example

     

    Example 2: A business providing courier or road freight and other services

    Buses Etc Pty Ltd is a business with an ABN that provides passenger transport on buses around Australia. They also sometimes provide transport of goods and items on empty return trips. They engage contractors to provide these services on their behalf.

    Buses Etc have total business income for the year of $750,000. The income they receive from the courier and road freight services is $50,000 for the year.

    To work out if they need to lodge a TPAR, Buses Etc use the following calculation:

    • total payments for courier and road freight services ($50,000) divided by total business income ($750,000)
    • $50,000 divided by $750,000 × 100 = 7%.

    Buses Etc Pty Ltd does not need to lodge a TPAR for this year, as their percentage of income from courier or road freight services is not 10% or more of their total business income. But they will need to work out their percentage each year to see if they need to lodge.

    End of example

     

    Example 3: Business that provides other services and delivery of their products

    • Rich Bliss Coffee is a business that runs a cafe selling coffee and meals.
    • Rich Bliss Coffee provides delivery service of coffee and food. They use contractors to make the deliveries for them.
    • If charge their customers for the delivery, they will need to calculate if the total delivery fees are 10% or more of their total business income for the year. If the delivery charges are 10% or more, they will need to report the payments made to the contractors in a TPAR.
    • If Rich Bliss Coffee use their employees to make the deliveries they will not need to report those payments in a TPAR.

    If Rich Bliss Coffee provides free delivery, even if they do engage contractors to make the deliveries on their behalf, they will not need to report those payments in a TPAR.

    End of example

    See also:

    Information technology (IT) services

    If your business provides any information technology (IT) services (even if it's only part of the services you provide), you may need to lodge a Taxable payments annual report (TPAR).

    You will need to lodge a TPAR each financial year that:

    • you make payments to contractors for the information technology (IT) services they provide on your behalf
    • the total amount you charge your customers and clients for information technology (IT) services is 10% or more of your business income for the year
    • you have an Australian business number (ABN).

    Payments made to employees are not included in your TPAR.

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

    Your first TPAR for payments made to contractors from 1 July 2019 to 30 June 2020, will be due by 28 August 2020.

    See also:

    What IT services are

    IT services include the provision of expertise in the field of information technologies, such as writing, modifying, testing or supporting software, to meet the needs of a client.

    IT services may be performed on site, or remotely through the internet. They include services that support or modify the operation of hardware or software, such as planning and designing computer systems to integrate computer hardware, software and communication technologies.

    Simply using IT hardware or software in your business to provide a service (other than an IT service) doesn't make your business a provider of IT services. So you would not be providing an IT service just because your business uses software to provide an accounting, project management, or word processing service as part of running your business.

    Example: Business that provides local are network design services

    Whiz Networking Pty Ltd has an ABN and provides the following services to its clients:

    • design and implementation of local area networks and intranets
    • supply and installation of network hardware
    • testing services
    • ongoing technical support.

    Whiz Networking employees are used to provide design and implementation of local area network and intranet services and for installing network hardware. They hire contractors to provide testing services and ongoing technical support.

    Under the TPRS, the supply and installation of network hardware is not considered an IT service. The other three services are IT services.

    To work out if they need to complete a TPAR, Whiz Networking needs to check whether 10% or more of their total business income for the financial year was from IT services.

    They work out the following amounts for the financial year:

    • total business income = $800,000
    • total income received for IT services (services 1, 2, and 4 above) = $650,000
    • payments made to employees = $300,000
    • payments made to contractors = $200,000

    They then calculate the service percentage by:

    • total payments received for IT services divided by total business income
    • $650,000 divided by $800,000 × 100 = 82%

    Whiz Networking will need to lodge a TPAR, as they paid contractors to provide IT services on their behalf and the income they received from those services was 10% or more of their total business income for the year.

    Whiz Networking will need to include identification details and the total amount paid to each contractor in the TPAR.

    They don't need to include the $300,000 of payments made to their employees because the TPAR is only for reporting payments to contractors.

    End of example

    Security information, investigation and surveillance services

    If your business provides any security, investigation or surveillance services (even if it's only part of the services you provide), you may need to lodge a Taxable payments annual report (TPAR).

    You will need to lodge a TPAR each financial year that:

    • you make payments to contractors for the security, investigation or surveillance services they provide on your behalf
    • the total amount you charge your customers and clients for security, investigation or surveillance services is 10% or more of your business income for the year
    • you have an Australian business number (ABN).

    Payments made to employees are not included in your TPAR.

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

    Your first TPAR for payments made to contractors from 1 July 2019 to 30 June 2020, is due by 28 August 2020.

    What security information, investigation and surveillance services are

    Security information, investigation and surveillance services include:

    • patrolling and guarding people, premises or property
    • watching or observing an area and monitoring security systems
    • investigation specifically related to security and surveillance, not just information gathering.

    Example: Business that provides alarms, monitoring and response services

    Response Now Pty Ltd has an ABN and provides the following services to their clients:

    • sales of alarm and security camera equipment
    • alarm monitoring services
    • security and crowd control for events.

    Response Now must consider whether these three services are security, investigation or surveillance activities.

    Alarm monitoring and crowd control services are considered security, investigation or surveillance activities because they involve watching or protecting individuals, premises or property.

    The sale of alarm and security cameras is not considered a security or surveillance service under the TPRS.

    To work out if they need to complete a TPAR for their security, investigation or surveillance services, Whiz Networking needs to check whether 10% or more of their total business income for the financial year was from these services.

    They work out the following amounts for the financial year:

    • total business income = $1,200,000
    • total income received for security, investigation or surveillance services = $500,000 (including alarm monitoring and event security)
    • payments to employees = $250,000 (used for sales as well as monitoring services)
    • payments made to contractors = 6 contractors, each paid $20,000 (used for event security)

    They then calculate the services percentage by:

    • total payments received for security, investigation or surveillance services divided by total business income
    • $500,000 divided by $1,200,000 × 100 = 42%

    Response Now will need to lodge a TPAR as they paid contractors to provide security, investigation or surveillance services on their behalf and the income they received from those services was 10% or more of their total business income for that year.

    Response Now will need to include the identification details and total amount paid to each contractor in the TPAR.

    They don't need to include the $250,000 of payments made to their employees because the TPAR is only for reporting payments to contractors.

    End of example

    Payments and details you need to report

    You must report payments made to contractors for the financial year.

    If you're not sure whether the payments you've made to contractors need to be reported, refer to

    On this page:

    Watch

    Media: How to keep good records for your Taxable Payments Annual Report (TPAR)
    http://tv.ato.gov.au/ato-tv/media?v=bd1bdiunjr5x3pExternal Link (Duration: 00:59)

    Keep accurate records to make lodging easier

    It's easier to complete your TPAR, if you keep good records. Check that you're collecting the right information about the payments you make to contractors.

    See also:

    Details you need to report

    The details you need to report are generally on the invoices contractors give you.

    For each contractor, you need to report:

    • their Australian business number (where known)
    • their name
    • their address
    • total amounts for the financial year  
      • the gross amount (this is the amount you paid them including GST) plus any tax withheld
      • the total GST you paid them
      • total tax withheld, if they did not provide an ABN.
       

    Worksheet

    A worksheet and payee information statement (in English) is available to help you record details of payments you make to contractors for the TPAR.

    Payments you do not report

    Do not report:

    • payments for materials only
    • any invoices that you have received but have not paid before 30 June each year
    • payments which must be reported in a Pay as you go (PAYG) withholding payment summary annual report, such as payments to employees
    • payments for private and domestic projects – for example, payments you make for cleaning, building or renovating your own home.

    Authorised by the Australian Government, Canberra

      Last modified: 03 Jun 2020QC 43149