More than 280,000 businesses will be required to complete another tax report by 28 August, the Australian Tax Office has said today.
The Taxable Payments Annual report (TPAR) is required for businesses that pay contractors, with the ATO noting that for many businesses, this will be the first year they have needed to lodge this report.
“This is the first year that businesses that pay contractors to provide road freight, information technology, security, investigation, or surveillance services may need to lodge a taxable payments annual report with the ATO,” ATO assistant commissioner Peter Holt said.
“This is in addition to those businesses providing building and construction, cleaning, or courier services that are already required to report.”
Continuing, Holt noted that due to Covid-19, many Australian businesses have “quickly adapted” by paying contractors to deliver goods.
“These businesses may need to lodge a taxable payments annual report if the total payments they receive for delivery or courier services are 10 per cent or more of their total annual business income,” Holt said.
What if a business doesn’t do this?
The ATO said the TPAR is necessary in checking businesses are paying the right tax, using valid ABNs and lodging BAS.
“It’s not fair if an honest business misses out on sales because a competitor is under-cutting them by doing things like under-declaring or not declaring income. The information we receive in the taxable payments annual report helps us shed light on this and keep things fair,” Holt said.
Information provided in TPARs is also used by the ATO to find contractors who are cooking the books.
“For example, not reporting income, failing to lodge tax returns or activity statements, not registering for GST, or using false ABNs,” Holt said.
“We encourage businesses who need to lodge a TPAR to get it done on time so you don’t miss the 28 August deadline – it’s not optional.”
However, there won’t be any penalties for businesses that lodge late this year, Holt added.
The ATO said this is a new obligation and so the focus is on education in the 2020 financial year, rather than penalties.
How do I do it?
The TPAR has been designed to sit with the other processes businesses need to go through at tax time.
“The good news is that the contractor details you need to report are usually on the invoices used to claim GST credits on your BAS, so you may find that once you lodge your BAS, you can tick your TPAR off your list shortly after,” Holt said.
“We know there is an issue with contractors quoting fake or invalid ABNs as a way of getting around their obligations. To help reassure businesses that they are reporting the right ABN for contractors they use, the new online TPAR form has a search function incorporated, allowing businesses to check whether the ABN is valid and correct.”
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