In the most recent Federal Budget, Government announced these three additional industries to lodge taxable payments reports with the ATO. Now you have to lodge a Taxable payments annual report (TPAR) by 28th August 2020 & then each year, if you are in the following business-
- road freight services
- information technology (IT) services
- security, investigation or surveillance services
These industries were already covered & applicability was there from 01st July 2018.
What is TPRS ?
Under the taxable payments reporting system (TPRS), targeted businesses need to report information to ATO about the payments they make to contractors for services. This additional reporting to the ATO is in the form of an annual report and put this reporting in line with payments made for salaries and wages to employees. This needs to be reported annually.
A purchaser that makes, or is liable to make, a payment for a specified supply during a year must give a report (the “taxable payments annual report”) to the Commissioner. It can be done and lodged from XERO itself.
What details needs to be reported ?
- Name (business name or individual’s name)
- Gross amount & GST for the financial year
All these must be there in the Invoice received from the contractors.
What if ABN of contractor, not quoted ?
If purchaser/businesses failed to quote ABN of any of the contractors, PAYG withholding with specified rate prescribed by ATO (say 20%) needs to be deducted from their payments. An intention of this type of policy is to ensure the industry at large is doing the right thing and paying workers appropriately.
Note-There are heavy penalties for the businesses who are in agreement with the individuals to provide services as a contractor when the law would state that they are employees.
If you are looking for some more information regarding this update then you can get in touch with your tax accountant for more update and how it will affect you.