The TPAR tells the Australian Taxation Office about payments that are made to contractors for providing services. Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.
View this 1 minute video to learn more - Introduction to TPAR or check out this handy fact sheet that includes an example worksheet to track contractor payments.
The details you need to report about your contractors are generally contained in the invoices you receive from them. The details you need to report for each payee include the:
- ABN (where known)
- name (business name or individual's name)
- total amounts for the financial year of the:
- gross amount paid (including GST plus any tax withheld)
- total GST you paid them
- total tax withheld where ABN was not quoted.
When you receive an invoice, check that the ABN on the invoice matches the ABN on your record for that contractor. Ensure you create a new contractor record if necessary. Where a contractor's ABN changed during the year, you will need to include each ABN for that contractor in your report.
You can check your contractors' details including ABN, name and GST registration to confirm they are correct by using ABN Lookup on the ABR website or the ATO app
You are not required to report payments if the invoices are for materials only. If you pay a contractor for invoices for both materials and labour, and at other times pay the same contractor for materials only, it can be difficult to work out the payments made for materials only. In this situation, you can choose to report all the payments you make to this contractor.
If an invoice you receive from a contractor includes both labour and materials, whether itemised or combined, you must report the total amount of the payment, unless the labour component is only incidental. (A payment for labour is considered to be incidental if the labour component is immaterial to the actual supply of the material.)
Below are some links to additional resources provided by the Australian Taxation Office to assist you with meeting your TPAR obligations: