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Reporting payments made to subcontractors (TPAR)

Businesses in the building and construction industry are required to report to the Australian Tax Office (ATO) payments made to contractors who carry out building and construction work. This reporting is done by lodging a Taxable Payments Annual Report (TPAR) by 28 August each year.

Do I have to lodge a report?

The contractor reporting requirements apply if you:

  • are a business that is primarily in the building and construction industry 
  • make payments to contractors for building and construction services, and 
  • have an Australian business number (ABN). 

From July 2018 businesses providing cleaning, courier, road freight, information technology and security investigation or surveillance services may also be required to lodge a TPAR.

Are you ‘primarily in the building and construction industry’?

You are ‘primarily’ in the building and construction industry if you earned more than 50 per cent of your income from ‘building and construction services’ in the current or previous financial year. This means that builders, developers, kitchen and bathroom and cabinet making businesses are required to report. In most instances businesses like hardware and department stores that may occasionally arrange for the supply and installation of certain products will be excluded.

What payments need to be reported?

Payments made to contractors for building and construction services need to be reported.

Building and construction services include the following activities performed on, or in relation to, any part of a building, structure, works, surface or sub-surface: 

  • Alteration 
  • Demolition 
  • Dismantling
  • Finishing 
  • Maintenance 
  • Repair 
  • Management of building and construction services (i.e. project management, contract administration) 
  • Organisation of building and construction services
  • Assembly
  • Design
  • Erection
  • Improvement
  • Modification
  • Site preparation
  • Construction
  • Destruction
  • Excavation
  • Installation
  • Removal
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Appendix

Payments to suppliers

You will also need to remember to report payments made to suppliers in situations where you are paying for more than just a product. For example, if you hire an excavator with an operator you will have to report the payment made to the hire company.

If you are only purchasing goods then no reporting is required. However, if you are invoiced for goods and services, you should report the total amount of the payment unless the services are merely incidental.

ATO Examples
Example with incidental labour component 

Kevin purchases a stock of new taps from Harry's Hardware to install in a commercial building. Harry installs one tap by way of demonstration so that Kevin knows how to install the rest. Harry's Hardware invoices Kevin for the taps and includes a small amount for the labour to demonstrate the installation. Kevin does not need to report the payment he makes to Harry's Hardware because the labour component of installing the tap is incidental to the supply of the materials. 

Example: Not incidental

An electrical business provides labour and materials for various electrical applications. A builder pays the electrical business for the supply and installation of wiring in a commercial fit-out that he is managing. As the provision of the installation service is a building and construction activity and more than incidental to the supply of materials, the builder will be required to report the total payment made to the electrical business. The builder is carrying on a business that is primarily in the building and construction industry.

Payments for private and domestic building work

Owner-builders and other individuals who are building or renovating their own homes and are making payments to contractors for building and construction services are not required to report. 

What information will you need to gather? 

For each contractor, you are required to report the following information each financial year: 

  • Australian business number (ABN) 
  • Contractor’s name, address and phone number 
  • The gross amount paid for the financial year (this is the total paid including any GST) 
  • The amount of goods and services tax included in the gross (total) amount paid 
  • The total tax withheld where the ABN was not quoted.

You are only required to report payments in the financial year in which the payment is made.

Therefore, to make complying with these new requirements as easy as possible it will be important to ensure your record-keeping practices gather the above information for each contractor you engage. 

How to report 

You will need to complete a Taxable Payments Annual Report form. You are required to lodge a report by 28 August each year. 

The report can be completed online provided you have an AUSkey or MyGov account and your accounting software can produce a report which meets ATO specifications. Alternatively, you can order a paper form online or by calling the ATO on 13 28 66.

To find out more, contact HIA's Workplace Services team

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