AU Taxable Payments Annual Report

Australia Taxable Payments Annual Report (TPAR) v1.0

General reference only. This skill is general tax and accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status or local procedures. Do not rely on it to lodge, pay, amend or take a tax position without review by a qualified professional.

Section 1 - Quick Reference

Quick reference table

Field	Value
Country	Australia
Year covered	Payments made from 1 July 2026 to 30 June 2027, reported by 28 August 2027
Who lodges	Businesses that pay contractors for building and construction, cleaning, courier, road freight, information technology, or security, investigation or surveillance services, and government entities that pay for services or make grants
The test	10% or more of business income from the relevant service (building and construction uses a 50% test instead)
Basis	Cash: payments made on or before 30 June, including GST
What to report per contractor	ABN, name, address, gross amount paid including GST, GST, and tax withheld where no ABN was quoted
How to lodge	SBR-enabled software, a TPAR data file, Online services for business, Online services for individuals and sole traders, or a registered agent; paper is no longer accepted
Not required	Lodge a non-lodgment advice so the ATO does not chase the report
Late lodgment	Failure to lodge on time penalty of one penalty unit ($364 from 1 July 2026) per 28 days or part, up to five units, multiplied for medium and large withholders
Primary legislation	Taxation Administration Act 1953, Schedule 1, Division 396 (third party reporting)
Tax authority	Australian Taxation Office
Reviewed by	Pending. Australian CPA or CA review required

Section 2 - The workflow

Step 1. Identify the services the business provides. Only the six taxable payments reporting system (TPRS) service types, and government entities, are in scope. See Section 3.

Step 2. Apply the test. Building and construction businesses ask whether 50% or more of income or activity is from those services, in the current or the previous year. Every other TPRS business asks whether 10% or more of its business income is from the relevant service. See Section 3.

Step 3. Extract the contractor payments for those services. Include invoices that mix labour and materials; exclude materials only, incidental labour, labour hire, employees, consolidated group members and private work. See Section 4.

Step 4. Confirm the contractor details. Check each ABN on ABN Lookup, keep name and address, and record GST and any no-ABN withholding. See Section 5.

Step 5. Reconcile to the ledger on a cash basis. Report what was paid in the year, not what was invoiced. An invoice unpaid at 30 June is reported in the year it is paid.

Step 6. Lodge by 28 August, or lodge a non-lodgment advice. See Section 6.

Step 7. Amend if a detail or amount was wrong. See Section 6.

Section 3 - Who must lodge

Taxable payments reporting system services

Service	Who is caught	Test
Building and construction	A business primarily in building and construction services that pays contractors for those services and has an ABN	50% or more of business income or business activity in the current year, or 50% or more of income in the previous year
Cleaning	A business providing cleaning services that pays contractors to deliver them	10% or more of business income from cleaning services
Courier and road freight	Combine the two when testing	10% or more of business income from courier and road freight services together
Information technology	A business providing IT services that pays contractors to deliver them	10% or more of business income from IT services
Security, investigation or surveillance	A business providing those services that pays contractors to deliver them	10% or more of business income from those services
Government entities	Government entities that pay for services or make grants	Payments to entities for services, and grants paid to people or organisations with an ABN

• The 10% test — Add up the payments received for the relevant service in the year, divide by current business income (or projected income for a business operating less than 12 months), and multiply by 100. At 10% or more, and with contractor payments made for that service, a TPAR is required. (ATO, Work out if you need to lodge a TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar)
• Building and construction — The definition is broad: alteration, assembly, construction, demolition, design, excavation, installation, maintenance (other than of equipment and tools), project management, repair, site preparation and similar work on any building, structure, works, surface or sub-surface. Cabinet making, landscaping, surveying, architectural drafting, engineering and equipment hire with an operator are all in; a hardware retailer that arranges installation, and testing and tagging of tools, are not. (ATO, Building and construction services, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/building-and-construction-services)
• Once in, in for two years — A business above 50% in one year must lodge for the following year as well, because the test also looks back at the previous year. (ATO, Building and construction services, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/building-and-construction-services)
• Separate entities — A retailer that sets up a separate installation entity moves the reporting obligation to that entity, whose income is wholly from building and construction services. (ATO, Building and construction services, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/building-and-construction-services)
• Government entities — Report payments for services and grants to ABN holders, including the grant date and program name, and whether a statement by a supplier was received. (ATO, Payments government entities need to report, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/payments-government-entities-need-to-report-in-their-tpar)

Section 4 - What to report and what to leave out

Reportable and non-reportable payments

Report	Do not report
Payments to contractors and subcontractors for the relevant service, whether sole traders, companies, partnerships or trusts	Payments for materials only
The whole invoice where it covers both labour and materials	Labour that is incidental to a supply of materials
Payments made on or before 30 June, including GST	Invoices unpaid at 30 June
Amounts withheld where the contractor quoted no ABN, if not reported on the no-ABN annual report	Workers supplied under a labour hire or on-hire arrangement
Payments to a subcontractor engaged by the business, even where that subcontractor sub-lets the work	Payments to employees and other PAYG withholding payments, which go through STP
	Payments to foreign residents subject to foreign resident withholding, and foreign residents for work performed overseas
	Payments to another member of the same income tax consolidated group
	Payments for private or domestic projects, including a business owner's own home

• Cash basis — Only payments made on or before 30 June are reported. Report an invoice paid in July in the following year's TPAR. (ATO, Payments businesses need to report in their TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/payments-businesses-need-to-report-in-their-tpar)
• No-ABN withholding — Where a supplier gives no ABN and the payment exceeds $75 excluding GST, withhold the top rate of 47%, give the supplier a payment summary, and report the withheld amount either in the TPAR or in the PAYG withholding where ABN not quoted annual report, never in both. (ATO, Withholding if ABN is not provided, https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/payg-withholding/payments-you-need-to-withhold-from/withholding-from-suppliers/withholding-if-abn-not-provided)
• Consolidated groups — Members of an income tax consolidated or multiple entry consolidated group do not report payments to each other, because the group is taxed as one entity. (ATO, Payments businesses need to report in their TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/payments-businesses-need-to-report-in-their-tpar)
• Mixed private and business payments — A cleaning agency reports the contractors who clean its clients' premises, but not the contractor it pays from a personal account to clean the owner's home. (ATO, Payments businesses need to report in their TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/payments-businesses-need-to-report-in-their-tpar)

Section 5 - Contractor details and records

• Details per contractor — ABN (each ABN if it changed during the year), business or individual name, address, and the year's totals of gross amount paid including GST and any tax withheld, total GST paid and total tax withheld where no ABN was quoted. The ATO may ask for phone, email and bank details. (ATO, TPAR contractor details to report, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar/tpar-contractor-details-to-report)
• Check the ABN — Match the ABN on each invoice to the contractor record and confirm the name and GST registration on ABN Lookup or the ATO app; create a new record when the ABN changes. (ATO, TPAR contractor details to report, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar/tpar-contractor-details-to-report)
• Records — Keep the contractor's name, address, ABN and the amounts paid including GST, and use the ATO's taxable payments reporting worksheet where the software cannot produce the report. (ATO, Lodge your TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar)
• Payee statements — Nothing has to be given to the contractor, but the ATO's payee information statement can be used to tell them what was reported, in whole dollars. (ATO, TPAR contractor details to report, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar/tpar-contractor-details-to-report)

Section 6 - Lodging, non-lodgment advice and amendments

• Channels — Lodge through SBR-enabled software, by uploading a data file that meets the TPAR specification, through Online services for business (Lodgments, then Taxable payments annual report), through Online services for individuals and sole traders, or through a registered tax or BAS agent using Online services for agents. Drafts can be saved and resumed, and the History section holds receipts. (ATO, Lodge your TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar)
• No paper — Paper TPAR lodgments have not been accepted since 28 August 2025. (ATO, Lodge your TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar)
• Non-lodgment advice — A business that has lodged before but does not need to lodge for a year should submit the TPAR non-lodgment advice form, which tells the ATO not to expect a report for that year. (ATO, TPAR non-lodgment advice, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar/tpar-non-lodgment-advice)
• Amendments — Correct a contractor's details or amounts by lodging an amended TPAR through the same channels; the ATO's amendment page sets out the steps for each channel. (ATO, Amend a lodged TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar/amend-a-lodged-tpar)

Section 7 - Penalties

• Failure to lodge on time — The base penalty is one penalty unit for each 28 days or part that the report is overdue, up to five units. Medium withholders pay twice the base, large withholders five times, and significant global entities 500 times. The ATO warns before penalising and considers remission, but a TPAR is a third-party data report, so the usual practice of not penalising a late nil or refund lodgment does not apply. (ATO, Failure to lodge on time penalty, https://www.ato.gov.au/individuals-and-families/paying-the-ato/interest-and-penalties/penalties/failure-to-lodge-on-time-penalty)
• Penalty unit — $364 for infringements on or after 1 July 2026 and $330 from 7 November 2024 to 30 June 2026, so a small business four months late in 2027 faces up to $1,820. (ATO, Penalty units, https://www.ato.gov.au/individuals-and-families/paying-the-ato/interest-and-penalties/penalties/penalty-units)
• Safe harbour — No penalty applies where the business gave a registered tax or BAS agent everything needed to lodge on time and the agent's failure was not reckless or intentional. (ATO, Failure to lodge on time penalty, https://www.ato.gov.au/individuals-and-families/paying-the-ato/interest-and-penalties/penalties/failure-to-lodge-on-time-penalty)

Section 8 - Worked example

Worked example facts

Item	Detail
Business	Sparkle Commercial Cleaning Pty Ltd, GST registered, operating for the whole of 2026-27
Business income for 2026-27	$600,000
Receipts for cleaning services	$90,000; the rest is sales of cleaning products
Contractor A	Sole trader with an ABN, GST registered, paid $44,000 for cleaning during the year including $4,000 GST
Contractor B	Company with an ABN, not GST registered, paid $12,500 for cleaning
Contractor C	Individual who quoted no ABN, invoice $2,000 for cleaning, paid in March 2027
Supplier D	Chemicals wholesaler, paid $8,000 for products only
Contractor E	Sole trader with an ABN, cleaning invoice of $3,300 dated 20 June 2027, paid on 8 July 2027
Labour hire firm F	Supplied two cleaners on an on-hire basis, paid $30,000

Facts. All figures are synthetic.

Step 1, the test. $90,000 of $600,000 is 15%, so cleaning services are 10% or more of business income, and the company paid contractors for cleaning. A TPAR for 2026-27 is due by 28 August 2027.

Step 2, the payments.

Contractor A   gross 44,000   GST 4,000   withheld     0   report
Contractor B   gross 12,500   GST     0   withheld     0   report
Contractor C   gross  2,000   GST     0   withheld   940   report (47% no-ABN withholding, net paid 1,060)
Supplier D     materials only                              exclude
Contractor E   paid after 30 June 2027                     report in the 2027-28 TPAR
Labour hire F  on-hire arrangement                         exclude

Step 3, the report.

Contractors reported                              3
Total gross amount including GST             58,500
Total GST                                     4,000
Total tax withheld where no ABN quoted          940

Step 4, the no-ABN amount. The $940 withheld from Contractor C is reported in the TPAR only. It is not also included in a PAYG withholding where ABN not quoted annual report, and Contractor C was given a payment summary at the time of payment.

Step 5, if the test had failed. Had cleaning receipts been $50,000, the share would have been 8.3%, no TPAR would be required, and the company would lodge a non-lodgment advice if the ATO had it on the TPRS list from an earlier year.

Section 9 - Common errors

• Applying the 10% test to a building and construction business instead of the 50% test, or forgetting the look-back to the previous year.
• Testing courier and road freight separately when the receipts must be combined.
• Reporting on an accruals basis and including invoices unpaid at 30 June.
• Excluding an invoice because it includes materials, when the whole invoice is reportable once labour is more than incidental.
• Reporting payments to employees, labour hire workers or consolidated group members.
• Reporting the no-ABN withholding both in the TPAR and in the no-ABN annual report.
• Using an old ABN after a contractor changes entity mid-year.
• Assuming a late TPAR carries no penalty because no tax is payable with it.
• Lodging on paper, which the ATO no longer accepts.
• Not lodging a non-lodgment advice when the obligation ends.

Section 10 - Self-checks

• The service type and the correct test (10% or 50%) are documented for the year.
• Courier and road freight receipts are combined for the test.
• Contractor payments are extracted on a cash basis for 1 July to 30 June.
• Every reported invoice is for the relevant service and is not materials only or incidental labour.
• Each ABN has been checked on ABN Lookup and matches the invoice.
• Gross amounts include GST and any tax withheld, and GST is shown separately.
• No-ABN withholding is reported in one annual report only.
• Employees, labour hire workers, consolidated group members and private work are excluded.
• The report is lodged by 28 August, or a non-lodgment advice is lodged.
• Any error found later is corrected through an amended TPAR.

Section 11 - Sources

• Taxation Administration Act 1953, Schedule 1, Division 396, Subdivision 396-B (reporting by third parties) and the Taxation Administration Amendment Regulation 2012 (No. 1) definition of the building and construction industry.
• ATO, Taxable payments annual report (TPAR), https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report
• ATO, Work out if you need to lodge a TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar
• ATO, Payments businesses need to report in their TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/payments-businesses-need-to-report-in-their-tpar
• ATO, Building and construction services, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/building-and-construction-services
• ATO, Payments government entities need to report in their TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/work-out-if-you-need-to-lodge-a-tpar/payments-government-entities-need-to-report-in-their-tpar
• ATO, Lodge your TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar
• ATO, TPAR contractor details to report, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar/tpar-contractor-details-to-report
• ATO, TPAR non-lodgment advice, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar/tpar-non-lodgment-advice
• ATO, Amend a lodged TPAR, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/reports-and-returns/taxable-payments-annual-report/lodge-your-tpar/amend-a-lodged-tpar
• ATO, Withholding if ABN is not provided, https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/payg-withholding/payments-you-need-to-withhold-from/withholding-from-suppliers/withholding-if-abn-not-provided
• ATO, Failure to lodge on time penalty, https://www.ato.gov.au/individuals-and-families/paying-the-ato/interest-and-penalties/penalties/failure-to-lodge-on-time-penalty
• ATO, Penalty units, https://www.ato.gov.au/individuals-and-families/paying-the-ato/interest-and-penalties/penalties/penalty-units

Sources were checked on 27 September 2026.

Working paper only, not a lodged report. Have a qualified Australian CPA or CA review the service test and the contractor extract before lodging. The ATO matches TPAR data against contractors' returns, so an omitted or misclassified contractor is visible.

Contributed by Ryan Duguid.

Contributed by Ryan Duguid.