Starting 1 July 2019, businesses who provide road freight, IT or security, investigation or surveillance services, and who pay contractors to provide those services on their behalf, will need to lodge a Taxable Payments Annual Report (TPAR).
The TPAR discloses the total payments made (including cash amounts) to each of a business’s contractors, for the provision of services on their behalf.
These new industries have been added to the list of businesses required to lodge a TPAR. The system was introduced during the 2013 financial year in the building and construction industries and has expanded to now also include cleaning and courier services.
A contractor can include subcontractors, consultants or independent contractors and they can be operating as a sole trader, company, trust or partnership.
The information that is provided on the TPAR include the contractor’s ABN, name, address and the total gross payments made to them during the financial year - information that should be readily available from your contractor’s invoice.
These reports are providing the ATO with another avenue of capturing and analysing data on contractors to ensure that they are correctly reporting their own income tax & GST obligations. The ATO have already indicated their pursuit of non-complying contractors with the many reviews and audits they have been requesting, the penalties they are handing out and the cancellation of ABNs in some circumstances. The readiness of information to perform data matching is making it harder for these previously cash based industries to escape ATO compliance and reporting obligations.
The ATO have identified that since the inception of the TPAR system that there have been measurable improvements in compliance for contractors. The reporting also provides an effective tool for identifying and targeting specific contractors and as a result, it is without doubt that the number of industries that will be captured under the system will continue to grow.
So it seems that some farmers may be captured this year with the introduction of the road freight obligation (and the mixed services regime that will capture you if you provide a mixture of the above services that make up only 10% or more of your total GST turnover).
However it also gets us thinking of who will be next… shearing, harvesting, spraying, fencing or perhaps general primary production based services? Time will only tell.
If you think you may be affected by the addition of the new industries to the TPAR system make sure you contact your accountant to ensure you meet your reporting obligations.
Contact your local RSM Office today.