If your business makes payments to contractors or subcontractors for services, you may need to report the payments in a Taxable Payments Annual Report (TPAR) to the ATO by 28 August.
Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.
You need to know about TPAR if your business provides any of the following services, even if it’s just part of the services you provide each year:
- building and construction services
- cleaning services
- courier services or road freight services
- information technology (IT) services
- security, investigation or surveillance services
- government entities.
The purpose of TPAR is to allow the ATO to identify payments made to contractors who:
- Don’t report all their income on their Income Tax return;
- Don’t lodge tax returns or activity statements;
- Are not registered for GST when they should be; and
- Quote the wrong ABN on their invoices.
Is there risk for your business?
The ATO is concerned with the contractors (the payees). But there is still risk for the payer; eg, claiming GST on payments to contractors not registered for GST. This increases your business’s risk profile with the ATO.
What’s the upside for your business?
This is a great opportunity for finance to demonstrate good governance to your board, by confirming vendors are registered for GST, and the Vendor Master file is updated and accurate.
We’d be happy to assist you prepare and review your TPAR and highlight the insights we can generate from your report using our Data Analytical tool, TPAR SNooPTM, before it goes to the ATO. It will be valuable for you to foresee what the ATO will find in the data that could impact your business. We will report these to you before your TPAR is lodged with the ATO. Insights we’ve gained for our clients using Data Analytics include:
- Contractors paid GST in 2020/21 who were not registered for GST at 1 July 2020, or were never GST registered – how much GST is at risk?
- Contractors were paid GST that deregistered for GST during 2020/21.
- Contractors’ ABNs showing as “Cancelled” but were paid gross payments in 2020/21 (i.e. no amount was withheld on the payment).
- Contractors registered for GST but you do not claim ITCs on the payments made – any upside available?
- Contractors registered as Individuals or Sole Traders – was there a super/payroll tax obligation?
- Contractors’ ABNs being invalid.
- Contractors with no ABNs in the data but have received gross payments.
Below are examples of TPAR SNooPTM’s dashboards:
TPAR SNooPTM also enables us to identify GST opportunities and risks, including:
- Unclaimed input tax credits
- Duplicate payments
- Overpaid tax where products are misclassified
- Overpaid tax where customers are incorrectly set up
- Anomalous transactions
- Opportunities to improve cashflow via accelerating the time input tax credits claimed
- Acquisitions that may qualify for a Reduced Input Tax Credit
- Supplies that may be treated as GST-free or outside scope
Please contact us if you would like to see a demonstration of our capabilities. Contact:
+612 8599 8320