Businesses need to report payments made to contractors or subcontractors during the financial year in their Taxable payments annual report (TPAR).
You must report by 28 August each year.
Report payments made to contractors or subcontractors for the following services:
- building and construction services
- cleaning services
- courier services
- road freight services
- IT services
- security, investigation or surveillance services
Report the total payment amount if an invoice you receive from a contractor includes both labour and materials.
You do not need to report the following payments in your TPAR:
- payments for materials only
- incidental labour
- unpaid invoices after 30 June: only report payments you made on or before 30 June each year
- 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
- pay as you go (PAYG) withholding payments. For example, you do not report payments to employees. Report these payments through the PAYG withholding annual report or Single Touch Payroll (STP)
- payments to 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 a TPAR
- foreign residents for work performed overseas
- contractors who do not quote an Australian business number (ABN)
- payments in consolidated groups
- payments for private and domestic projects.
Exclude the labour amount for invoices that list both materials and labour. Do this if the labour is incidental to the supply of materials.
Example: incidental labour component
Kevin buys new taps from Harry's Hardware to install in a commercial building.
Harry's Hardware installs one tap to show Kevin how to install the rest.
Harry's Hardware invoices Kevin for the taps. On the invoice, Harry's Hardware includes a small amount for labour to show the installation.
In this case, labour is incidental. Therefore, Kevin does not need to report the payment he makes to Harry's Hardware in a TPAR.End of example
If an ABN is not provided, you may need to withhold an amount from the payment for that supply under the PAYG withholding arrangements.
Report the amounts withheld in either the:
- PAYG payment summary – withholding where ABN not quoted form (NAT3448).
Only report this information in one of these annual reports, not both.
If you are in a consolidated or multiple entry consolidated group for income tax purposes, you do not need to report payments made to another member of that same group.
This is because members of a consolidated group or multiple entry consolidated group are 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. It makes a payment to Paint Co for painting its building project.
Brick Co and Paint Co are in the same consolidated group. Therefore, Brick Co does not report the payment made to Paint Co for painting services.
However, Brick Co must report payments made to entities outside the consolidated group for the supply of building and construction services.End of example
You do not need to report if you are:
- an individual who is not running a business and you make payments to contractors for services
- for example, if you are a homeowner building or renovating your main residence
- a business making payments to contractors for services for private purposes
- for example, cleaning your own home.
If the work is related to carrying on a business, the amounts paid to the contractors for this work must be reported. These are payments that businesses can claim as a tax deduction.
Example: homeowner paying for building and construction services
Kristyn has an ABN for the purposes of running a design business. She manages the construction of her new home and makes payments directly to the contractors.
Kristyn does not need to report payments she makes to contractors. This is because she is acting in a domestic capacity, not as a business.End of example
Example: mixed personal and business payments in the cleaning industry
Svetlana is a sole trader with an ABN. She runs her own cleaning agency.
She cleans homes and offices for her clients. 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. She pays the contractor for this from her personal bank account.
Svetlana must report the payments made to contractors that perform cleaning services for her clients.
However, Svetlana does not need to report the payment made to the contractor for cleaning her own home. This is because the payment is made by Svetlana in her private capacity and not as part of her business.End of example
The Taxable payments reporting worksheet (PDF 75KB)This link will download a file helps you record details of payments made to contractors for services.
You can use the details you have recorded in this worksheet to complete your TPAR.
The worksheet is for your records only, do not send this to us.Businesses need to report payments made to contractors in their Taxable payments annual report (TPAR).