You must lodge a Taxable payments annual report (TPAR) if all conditions are met:
- your business provides information technology (IT) services to other people or businesses
- you paid contractors or subcontractors to provide these IT services on behalf of your business
- you have an Australian business number (ABN).
Payments made to employees are not reported in your TPAR.
Each year, you must:
- review if you need to lodge a TPAR
- report these payments to us on your TPAR by 28 August.
If IT services are only part of what your business provides, you may need to fill out a TPAR.
- work out how much of your business income came from IT services
- add up the money your business was paid for providing IT services for the financial year. A financial year is the 12 months from 1 July to 30 June
- include payments for services provided by both employees and contractors or subcontractors
- work out the total amount of your business income for the year.
If the total payments, you receive for IT services are:
- 10% or more of your gross business income: you must lodge a TPAR
- less than 10% of your gross business income: you do not lodge a TPAR.
You can also choose to lodge a TPAR even if you are:
- under the 10% threshold
- unsure if you will be under the threshold.
See the steps on how to Work out if you need to lodge
Example: IT company using both employees and contractors
Goodtime Software has an ABN and develops accounting software for clients.
An accounting firm uses Goodtime to write an accounting software suite tailored to the needs of the firm.
Goodtime develops software for the accounting firm. It also provides ongoing software patches to fix bugs.
The software is not produced for general sale or distribution.
Goodtime is providing an IT service because:
- the software was developed for the client for which Goodtime was contracted
- the writing of software patches for this accounting software is considered an IT service. This is because the patch was written to address issues in the accounting software specifically developed for the client.
- employees to develop the accounting software
- contractors to write patches.
At the end of the financial year, the total payments Goodtime received for IT services is 68% of its gross business income. Contractors made up 30% of these payments.
Goodtime needs to report the payments made to its contractors on a TPAR. This is because the contractors are providing an IT service on behalf of Goodtime.
Goodtime does not report the payments made to its employees on a TPAR. Instead, they report these payments in Single Touch Payroll (STP).End of example
If you are providing a relevant IT service and engaging a contractor to provide that service on your behalf, the payment to that contractor is reported in the TPAR.
Contractors can be located outside of Australia and may not have an ABN. There is no exclusion based on the location or tax residency of the payee.
If an ABN is not provided, you may need to withhold payment under the pay as you go (PAYG) withholding arrangements.
IT services can be completed at a work site or online.
Some examples of IT services include:
- computer facilities management
- computer hardware consulting
- computer network systems design and integration
- computer programming
- computer software consulting
- customised software development
- internet and web design consulting
- IT consulting
- software installation
- software simulation and testing
- systems analysis
- technical support.
Examples of activities that are not IT services include:
- using IT hardware or software in your business to provide a service (other than an IT service)
- for example, you would not be providing an IT service if your business uses software to operate an accounting, project management or word processing business
- mass producing computer software. For example, reproduction of recorded media
- the leasing or hiring out of computers or other data processing equipment
- providing data processing services or computer data storage and retrieval services
- installing computer cables.
Example: company designing local area networks for large businesses
Whiz Networking has an ABN and provides the following services to its clients:
- design, development, installation and testing of local area networks and intranets
- ongoing technical support.
Whiz Networking uses contractors to:
- install and test the network hardware
- develop, install and test the intranet
- provide ongoing technical support.
The services Whiz Networking provides to its clients makes up 40% its business income. Therefore, it must report in a TPAR the payments made to contractors for these IT services.End of example