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How do I know if I have to report Taxable Payments for contractors?

Tania Large Written by
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02
Jul
Topic1

If your business is in the building and construction industry, you might have heard of changes in your financial year reporting.

Last year, the government introduced taxable payments reporting to improve tax compliance within the building and construction industry. Businesses are now required to report the total payments made to each contractor for building and construction services to the ATO, dating back from 1st July 2012.

According to the ATO, the information reported will be used to detect contractors who have not lodged tax returns or included all of their income on tax returns that have been lodged. You will need to lodge a Taxable Payments Annual Report (TPAR) if:

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

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What others are saying

  1. Author

    David

    July 4, 2013 at 3:19 pm

    If a subcontractor is not registed for GST. Do we need to report payments to him.

    • Author

      Pam Pitt

      July 4, 2013 at 6:01 pm

      Hi David,
      The ATO says that you are required to report payments to each contractor – it does not exclude any contractors on the basis of their GST registration. From the ATO: “From 1 July 2012, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year.”
      Cheers
      Pam

      • Author

        Kellie

        July 5, 2013 at 8:34 am

        The information on the ATO website answers all of your questions really well. MYOB has also produced a publication that provides detailed information on the reporting requirements. I found these by doing a Google search on taxable payments reporting.

        Yesterday I produced the Taxable Payments Annual Report (TPAR file) and it was submitted to the tax office by my Accountant. The only issue was my Accountant had to have their AUSKey permissions updated to include the TPAR files.

        Good Luck.

        KP

      • Author

        David

        July 5, 2013 at 12:36 pm

        Thanks for that Pam. I also ordered paper reports for this year. I will look at doing it electronically next year assuming that the next Government continues this requirement.

  2. Author

    Sarah W

    July 8, 2013 at 1:16 pm

    I would like to hear if anyone has advice regarding the reportable payments. The medium sized commercial construction company I work for, like many others has sub contractors that do both supply only e.g. roofing sheets on one project with no installation but on a different project might to supply and install. In MYOB I have 2 different ledger accounts one for just materials where no work is done on site by the supplier and another ‘subcontractors’ account where we have 100′s of subcontractors that do either supply and install and or work on site e.g. civil, mechanical, hydraulic etc.
    My question is how is the reportable payments in MYOB set up to handle this. From what I can see it appears I need to go into every supplier I have ticked as a reportable payments supplier when they come up in the report after clicking report taxable payments. At this level do I have to go into every supplier/contractor and then compare every invoice listed to the GLD report for the 2 accounts eg supply only and the other being subcontractors. I would have thought in the update of MYOB more filter options would have been available rather than having to do this process manually. To give an indication there would be approximately 12,000 transactions that would fall between reportable and non reportable for about 600 of our suppliers / contractors. (not an attractive proposition) Is there a faster way????

    • Author

      Pam Pitt

      July 15, 2013 at 11:46 am

      HI Sarah
      This is what the ATO says as an example in a business like yours…

      I am in the building and construction industry. Sometimes I pay one of my contractors for invoices for both materials and labour. Other times I pay for materials only. Do I report all of the payments I make to this contractor?

      You are not required to report payments made for materials only.

      However, if you are unable to easily separate payments made for materials only without significant administrative effort, you can report all the payments you make to this contractor.

      Cheers
      Pam

  3. Author

    adam coghlan

    July 11, 2013 at 9:41 pm

    what happens when someone works for you and doesn’t have a ABN
    looking to take him on as an apprentice worked on a casual bases

    • Author

      Pam Pitt

      July 13, 2013 at 11:32 am

      Hi Adam,
      If they are treated as a casual employee, and included in your gross wages and PAYG, then they are not a contractor, so you wouldn’t need to report them in with the reportable taxable payments for contractors.
      Cheers
      Pam

  4. Author

    Paula

    July 12, 2013 at 4:43 pm

    Am I required to report on companies who contract to my business, or just individuals?

    • Author

      Pam Pitt

      July 15, 2013 at 11:29 am

      Hi Paula,
      Yes, I believe that you have to report all contractors, regardless of whether they are companies or partnerships or sole traders.
      Cheers
      Pam

  5. Author

    Ian Rogers

    July 16, 2013 at 6:58 pm

    Hi Pam
    How do i retrieve the data in myob for TPAR or is there a section in there that fills in the report with the subcontractors past payments.

    Kind regards

    Ian Rogers

    • Author

      Pam Madytianos

      July 17, 2013 at 12:21 am

      Hi Roger
      The Taxable Payments Annual Report can be generated via the Purchases command centre by clicking Report Taxable Payments (or Print Taxable Payments in older versions). This opens an assistant which helps you:
      • review your company information
      • review the reportable transactions
      • review the payees (suppliers/employees) you have setup for taxable payments reporting
      • print the Taxable Payments Annual Report for your records, to provide your payees a list of their reportable payments, or to help you complete the pre-printed forms provided by the ATO on NAT 74109
      Cheers…Pam

      • Author

        Julia

        July 17, 2013 at 9:25 pm

        I am having trouble trying to generate report in order too gather information to fill out paper report.
        I don’t think I have rolled over the previous financial year as yet. could this be what is causing me grief?

        I can not find print/report taxable payments in the command centre.

        very confused. I have Plus 19 by the way

  6. Author

    Tanya

    August 5, 2013 at 6:40 pm

    Does the reportable payments to the ATO for subcontractors include manufacturing?

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