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TPAR expansion to road freight, IT/security, and investigation/surveillance businesses

December 2018


The Taxable Payments Reporting system was introduced to stem the flow of cash payments to contractors and rampant under-reporting of income.

Since the building and construction industry was first targeted in 2012, the reporting system has been expanded to include cleaning and courier services. Now, a broader set of industries will be targeted.

If a business has an ABN, and is in road freight, IT or security, investigation or surveillance, then any payments made to contractors will need to be reported to the Australian Tax Office (ATO).

Be careful: The definition of these industries is very broad

The definition of these industries is very broad in the legislation. For example:

  • Investigation or Surveillance – The definition includes covers services that provide "protection from, or measures taken against, injury, damage, espionage, theft, infiltration, sabotage or the like," which may include locksmiths,
  • IT Services – The definition in the legislation covers "expertise in to computer hardware or software to meet the needs of a client." This includes software installation, web design, computer facilities management, software simulation and testing. It does not include the sale of software or lease of hardware.
  • Road Freight - Road freight is typically goods transported in bulk using large vehicles, including services such as log haulage, road freight forwarding, taxi trucks, furniture removal, and road vehicle towing. The addition of road freight to the taxable payments reporting system completes the coverage of delivery and logistics services as businesses in courier services are already obliged to report payments to contractors to the ATO.

Businesses impacted by these changes will need to document the ABN, name and address, and gross amount paid to contractors from 1 July 2019, with the first report due to the ATO

If your business is impacted by these changes, you need to document the ABN, name and address, and gross amount paid to contractors from 1 July 2019. Your first Taxable Payments Annual Report (TPAR) due to the ATO 28 August 2020.

While this might seem like a long way away but it will come around quickly and businesses need to ensure that systems are in place to manage the reporting required easily and accurately.

Who needs to report?

The obligation to report contractor payments to the ATO is already quite broad. The addition of road freight, IT or security, or investigation or surveillance services, adds another layer.

Service

Reporting of contractor payments

Building and construction services

From 1 July 2012

Cleaning services

From 1 July 2018

Courier services

From 1 July 2018

Road freight, IT or security, or investigation or surveillance services

From 1 July 2019

For businesses providing mixed services, if 10% or more of GST turnover is made up of affected services, then the business will need to report the contractor payments to the ATO.

Check that your systems are in order

If your business engages contractors to deliver its services, then now is the time to be speaking to your accountant and back office teams to ensure that the right reporting mechanisms are in place. Speak to our team on 02 9957 4033 to discuss how this will impact your business.

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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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