If your business pays contractors, you may need to lodge a Taxable Payments Annual Report with the Australian Taxation Office by 28 August 2026.

The Taxable Payments Annual Report, usually called a TPAR, records qualifying payments made to contractors during the previous financial year. For the 2025–26 financial year, the report covers relevant payments made from 1 July 2025 to 30 June 2026.

TPAR requirements can be easy to overlook, particularly for businesses that provide a mix of services or only hire contractors occasionally. This Taxable Payments Annual Report TPAR guide explains the taxable payments reporting system, which payments must be included, what contractor details are required and how Bonerath & Co. can help you lodge a TPAR correctly.

What is a Taxable Payments Annual Report?

The Taxable Payments Annual Report (TPAR) is part of the ATO’s taxable payment reporting system, also known as the Taxable Payments Reporting System or TPRS.

Under the system, certain businesses and government entities disclose payments made to contractors and other entities for specified services. The ATO uses TPAR reporting information to help identify business income that may not have been included in tax returns, check whether contractors are meeting their tax obligations and support the integrity of Australia’s tax system.

From Tax Time 2026, TPAR amounts may also pre-fill into the tax return of an individual in business, including a sole trader. The pre-filled amounts reflect payments received that another entity has reported through a TPAR. Contractors must still check the information against their own records and ensure all taxable payments and other business income are reported correctly. Most TPAR data will only become available after 28 August, unless the payer lodges early.

Who needs to lodge a TPAR in 2026?

You may need to lodge a TPAR if your business has an Australian business number and pays contractors or subcontractors to provide covered work on its behalf.

The reporting requirements apply to certain industries and to businesses providing:

• building and construction services
• cleaning services
• courier services
• road freight services
• information technology services
• security, investigation or surveillance services.

Construction businesses operating primarily in the construction industry generally need to include payments to contractors for building and construction services.

For the other covered industries, including cleaning services, courier and road freight services, information technology and surveillance services, the ATO generally applies a 10% income test. If 10% or more of your gross business income for the financial year comes from providing one or more of these certain services, you may need to lodge a TPAR when you pay contractors to perform those services on your behalf. If the amount is less than 10% of your total business income, you are generally exempt from lodging for those services.

This means mixed-service Australian businesses can still have TPAR obligations. The test is based on the income earned from the covered service, not simply the industry label used to describe the business.

What is a relevant service?

A relevant service is a service your business provides to customers and then engages a contractor to perform on its behalf.

For example, a cleaning business that pays contractors to complete cleaning services for its customers would generally include those contractor payments. A road freight business that pays independent contractors to complete deliveries may also need to include those payments.

However, an internal business expense is not automatically covered. If the same cleaning business hires an IT consultant to repair its office network, the IT work is not a cleaning service supplied on behalf of the business. The payment would not usually be included merely because information technology services are covered elsewhere by the TPRS.

The distinction depends on the services your business supplies, the work the contractor performed and the relationship between the contractor records and your income-producing activities. The TPRS services categories can overlap, so businesses should review the substance of each arrangement rather than relying only on an industry description. Seek business advice where an arrangement includes several types of labour, equipment or materials.

Government TPAR reporting

Government entities also have reporting obligations under the taxable payments reporting system.

Federal, state, territory and local government entities generally need to disclose payments made wholly or partly for services. Federal, state and territory government entities must also report grants paid to people or organisations with an Australian business number. Local government entities do not report grants under these rules.

There are exemptions for certain government entities and transactions, so the specific TPAR requirements should be reviewed before lodging.

What payments must be included?

The rules for reporting payments require businesses to report payments made to contractors for the covered service during the previous financial year. The TPAR report is based on payments made, not simply contractor invoices received.

Only payments actually made on or before 30 June are included. If an invoice includes both labour and materials, the total payments are generally reported where the payment relates to the supply of a covered service. This means you do not split out the materials component merely because materials were included on the same invoice. Businesses that pay contractors should review the full payment rather than reporting only the labour component.

It's important to report payments regardless of whether they were made by bank transfer, cash, cheque or another method. The total amount includes goods and services tax where applicable.

For each contractor, the TPAR reports the total payments and total GST paid during the financial year, along with any tax withheld where the contractor did not quote an ABN.

What contractor details do you need?

You should collect and verify the following contractor details:

• Australian business number
• legal or business name
• business address
• gross amount paid, including GST
• total GST included in the payments
• total tax withheld where an ABN was not quoted.

Most of this information should appear on the contractor invoices and in your accounting software. It is good practice to confirm contractor details when you first hire contractors rather than trying to correct incomplete records at the end of the financial year.

What payments do not need to be reported?

Certain payments are excluded from the Taxable Payments Annual Report. Depending on the circumstances, you generally do not report:

• payments for materials only
• unpaid invoices as at 30 June
• incidental labour
• payments to employees reported through payroll
• payments made under a labour-hire or on-hire arrangement
• private or domestic payments
• foreign residents payments that are subject to PAYG withholding rules
• certain payments already reported under another ATO reporting obligation.

For labour hire firms, payments to workers supplied under a labour-hire arrangement are generally not included in the payer’s TPAR. The labour-hire firm has its own payroll and tax obligations.

Payments involving non-resident contractors can be complex. Foreign residents payments for work performed in Australia may fall under PAYG withholding rules. Australian residents and non-residents can have different reporting treatment, so obtain advice before excluding such payments.

Unpaid invoices are not included because a TPAR records payments, not amounts owing. If a contractor invoice dated before 30 June remains unpaid, it is reported in the later financial year when payment is made, provided the other reporting requirements are met.

What about no ABN payments?

If a supplier does not quote an ABN, you may have to withhold tax from the payment under the no-ABN withholding rules. The payment and the amount withheld may still need to be included in the TPAR.

Keep evidence of the contractor’s Australian business number, invoices and any withholding. These records support both your TPAR reporting and your broader tax return obligations.

When is the TPAR due?

The deadline to lodge a TPAR for the 2025–26 financial year is 28 August 2026.

You can submit the Taxable Payments Annual Report through supported accounting software, ATO online services for business, a registered tax or BAS agent, or an approved electronic reporting method. TPARs must now be lodged electronically. The ATO no longer accepts paper TPAR forms.

If you do not need to lodge, you may be able to submit a TPAR non-lodgement advice. This tells the Australian Taxation Office that a report is not required and can reduce unnecessary follow-up reminders.

Late or missing TPAR reports may attract penalties. The ATO has stated that it applies penalties to clients who fail to lodge overdue reports, making it important to review your TPAR obligations before the deadline.

How to prepare your TPAR

Before lodging, reconcile your contractor accounts for the previous financial year and check that payments have been allocated correctly in your accounting software.

Review whether your business provides any covered service, calculate the proportion of total income earned from those services where the 10% test applies, and identify every contractor who was paid to provide the service on your behalf.

Then check that each contractor’s ABN, name, address, gross payments, GST and withholding amounts are complete. Compare the draft TPAR with your general ledger, bank records and source invoices before submission.

Do not assume your accounting software will make every reporting decision automatically. Software can help prepare the return, but the quality of the report depends on how contacts, transactions and tax codes were set up throughout the year.

Common TPAR mistakes

Common issues include treating every contractor expense as reportable, leaving out contractors because they are sole traders, reporting unpaid invoices, excluding the materials component from a combined labour-and-materials invoice, and using incomplete contractor details.

Another risk is overlooking TPAR obligations where only part of the business provides a covered service. Certain businesses can be required to report even when cleaning, courier, road freight information technology, or security investigation or surveillance work is not their main source of income.

The reverse is also true. A business does not necessarily include payments to contractors simply because it hires contractors. The contractor must generally be providing the covered service on the business’s behalf and the applicable industry and income tests must be met. These checks form part of the business’s broader tax obligations.

How Bonerath & Co. can help

At Bonerath & Co., we can help you determine whether you need to lodge, review the payments annual report data produced by your software and identify missing or incorrectly classified contractor payments.

We can assist with:

• reviewing your business activities and total business income
• assessing the 10% income test for covered services
• checking payments to contractors against your ledger
• confirming contractor details and no-ABN payments
• correcting software setup
• preparing and lodging the TPAR
• submitting non-lodgement advice where appropriate
• improving your process for the next financial year.

If you are unsure whether your business needs to lodge a taxable payments annual report, contact Bonerath & Co. We can review your circumstances, explain your TPAR obligations and help you lodge a TPAR with confidence.