TPAR: who has to lodge one, the 10% rule, and the 28 August deadline

The taxable payments annual report is a once-a-year obligation that a lot of businesses do not realise applies to them, right up until the ATO writes to them about it.

It is not complicated. What it is, is easy to miss - because the trigger is not what industry you think you are in, and the businesses it catches are often the ones that would never describe themselves as being in a "TPAR industry" at all.

What a TPAR is

A TPAR reports the total payments your business made to contractors for certain services during the financial year. One line per contractor: who they are, and what you paid them.

Nothing is payable with it. It is an information report, not a tax bill. Lodging one does not change what you owe, and it is not an accusation against anyone you paid. It is a reporting obligation on you, and not lodging it is a problem for you, not for them.

What the ATO does with the data is matching. Every line gets compared against what that contractor declared. It finds contractors who left income off a return, did not lodge at all, quoted an ABN that is not theirs, or should have registered for GST and did not. The data also feeds the income pre-fill that sole trader contractors see in their own returns - which is why "my subbie asked why his return already knew about me" is a sentence bookkeepers hear every spring.

The system started with building and construction and has been extended in stages since - plenty of businesses that were correctly outside it once are inside it now and have not noticed.

Who has to lodge one

Six service categories are covered. Roughly, they mean this:

• Building and construction - the ATO's list of covered services is deliberately wide, running from architecture, surveying and project management through bricklaying, electrical, plumbing, painting and landscaping to demolition.
• Cleaning - interior and exterior cleaning of buildings, offices, venues, events and carparks.
• Courier - parcels, packages, letters and food delivered by car, bike or on foot.
• Road freight - larger loads moved by truck, including through subcontracted drivers.
• Information technology - writing, modifying, testing or supporting software and systems. Selling hardware or off-the-shelf software is not an IT service.
• Security, investigation or surveillance - guards and patrols, monitoring of security systems, and investigation work.

Government entities also lodge, reporting payments to third parties for services plus grants paid to people and organisations with an ABN.

The test for whether you are in is different for building and construction than for the other five, and the difference matters.

Building and construction: the 50% test

You are in the building and construction industry for TPAR purposes if 50% or more of your business income or business activity in the current financial year relates to building and construction services, or if 50% or more of your income did in the year before. In practice: if you are a trade business that pays subbies, assume you have a TPAR obligation unless someone who has looked at your numbers tells you otherwise.

Everyone else: the 10% rule

For cleaning, courier, road freight, IT and security services, the threshold is much lower. If payments you received for that type of service are 10% or more of your GST turnover, you have a TPAR obligation for the contractors you paid to help deliver it - even if the service is a sideline and the rest of the business is something else entirely.

That sweeps in a lot of businesses that would never describe themselves this way:

• A retailer or wholesaler that charges for delivering its own goods - that can be courier or road freight income.
• A restaurant or fast food business running its own paid deliveries.
• A property management or facilities business that arranges cleaning and bills for it.
• A consultancy or agency that does enough billable IT services work to cross the line.

Worked through: a food business turns over $800,000, of which $85,000 is delivery fees, and the deliveries are done by contract drivers. Delivery income is more than 10% of turnover, so the payments to those drivers go on a TPAR - even though nobody involved thinks of the business as a courier company.

The test is worth actually calculating rather than eyeballing, particularly for a business that has grown a service line without anyone stopping to reclassify it. If you are close to 10%, that is a conversation to have before August, not during it.

What gets reported

For each contractor, taken straight from their invoices:

• Name and ABN
• Address
• Total paid for the year, including GST
• Total GST included in those payments
• Any tax withheld because an ABN was not quoted

"Contractor" is broader than sole traders. Companies, partnerships and trusts you pay for covered services are all reportable - the structure on their invoice does not matter.

On the last item in the list: where a supplier does not quote an ABN, you are generally required to withhold at the top rate of 47% and remit it to the ATO. That is not a penalty on you - it is a withholding obligation, and the amount withheld goes on the TPAR.

What does not get reported

• Payments for materials only. Where an invoice covers both labour and materials and does not separate them, report the whole amount.
• Employees. Wages go through Single Touch Payroll instead. TPAR is for contractors - though if a "contractor" works only for you, on your hours, with your equipment, the real problem is not which report they belong on. The employee-or-contractor test has changed, and it looks at the whole relationship.
• Invoices unpaid at 30 June. TPAR works on a cash basis - what you actually paid during the year, not what you were billed.
• Payments already reported to the ATO another way - workers under a labour hire arrangement or payments to foreign residents where tax was withheld and reported.
• Payments within a consolidated group.
• Private or domestic payments unrelated to the business.
• Incidental labour, where the labour is minor and incidental to a supply of goods.

The cash-basis point is the one that produces mismatches. If your accounts run on accruals, your TPAR figures will not agree with your profit and loss, and that is correct rather than an error. It also means a June invoice paid in July belongs on next year's report, not this one.

How to lodge

The TPAR is due 28 August each year, covering the financial year that ended on 30 June. Where 28 August falls on a weekend or public holiday, it moves to the next business day.

Three ways to get it in:

• Through your accounting software. In Xero, contractors flagged for TPAR feed a built-in report you can review and lodge. The flagging is a one-time setup per contact, and the reporting is then close to automatic.
• Through ATO Online services for business, filling in the report directly.
• Through a registered BAS or tax agent. Preparing and lodging a TPAR is a BAS service, so a registered BAS agent can handle it for you.

If you do not need to lodge this year but have in the past, submit a TPAR non-lodgment advice. Otherwise the ATO keeps expecting one, keeps following up, and the reminders escalate.

What happens if you are late

Failure to lodge on time attracts one penalty unit for every 28 days (or part of 28 days) overdue, capped at five units. From 1 July 2026 a penalty unit is $364, so a small business faces up to $1,820 per late report. Businesses between $1 million and $20 million turnover are charged at double that rate, and larger ones at five times.

The part that stings beyond the money: a missed TPAR is a visible compliance flag on your account - the kind of thing that draws attention to everything else, including the contractors you paid, some of whom may be badly classified employees.

How to know through the year rather than in August

TPAR is painful in exactly one situation: when nobody tracked contractor payments during the year and it all has to be reconstructed in August from bank statements and memory. The fix is five habits, none of them big:

1. Decide once a year whether you are in scope. Run the 50% or 10% test against real numbers each July, and again any time the service mix changes. A business that starts charging for delivery mid-year has changed its answer.
2. Capture the ABN and address when a contractor is first engaged, and check the ABN is real and active on ABN Lookup. Chasing details in August from a subbie who moved on in October is the single most annoying part of a late TPAR.
3. Flag the contact in your software on day one. In Xero that is one checkbox, and it means every payment from then on lands in the report by itself.
4. Code contractor payments consistently - one account for subcontractors, not a scatter across "materials", "repairs" and "general expenses". The report is only as good as the coding underneath it.
5. Withhold 47% the moment an invoice arrives without an ABN, rather than paying in full and hoping. The withholding is the rule; paying gross is the exception you have to justify.

Do those five and the August lodgement is a ten-minute review. Skip them and it is a reconstruction project with a deadline.

If this August is already looking bad

We prepare and lodge TPARs for clients across building and construction and the other covered industries. The work that makes it easy happens through the year rather than in August - contractors flagged when they are engaged, ABNs checked, payments coded to one account - which is what ongoing bookkeeping is for. If yours is due in a fortnight and the contractor records are not in a state to support it, catch-up bookkeeping is the fix, and it is worth a conversation before 28 August rather than after.

General information only, current as at the date above. Confirm your own reporting obligations with the ATO or your adviser.