ATO reminder to lodge your Taxable Payments Annual Report
The ATO has reminded relevant taxpayers to lodge their Taxable Payments Annual Report (TPAR) by the annual deadline or as soon as possible. The ATO has made it clear that the deadline each year is firm and businesses that fail to lodge their TPAR may be subject to penalties. The size of the penalty depends on both the size of the entity and how long the report remains overdue.
The TPAR applies to businesses in:
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building and construction
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cleaning services
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courier and road freight services
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information technology services
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security, investigation or surveillance services
This applies where contractors have been paid for providing these services.
Failure to lodge penalties explained
Penalties for failing to lodge a TPAR are calculated using penalty units, which increased from 1 July 2023. One penalty unit is now $313.
Small entities
For small entities, the failure to lodge penalty is one penalty unit for each 28-day period (or part of a period) that the TPAR is overdue, up to a maximum of five penalty units. This means the maximum penalty for a small entity is $1,565.
Medium entities
For medium entities, defined as a medium withholder for PAYG withholding purposes or an entity with assessable income or current GST turnover of more than $1 million and less than $20 million, the penalty unit is doubled. This results in a maximum failure to lodge penalty of $3,130.
Large entities
For large entities, being large withholders for PAYG withholding purposes or entities with assessable income or current GST turnover of $20 million or more, the penalty unit is multiplied by five. This means the maximum penalty can reach $7,825.
Global significant entities
For global significant entities, the base penalty unit is multiplied by 500. This means the maximum penalty that may apply is $782,500.
According to the ATO, more than 16,000 penalties were recently issued to businesses that failed to lodge their TPARs for previous years despite receiving multiple reminders. The average penalty issued was approximately $1,110.
If you do not need to lodge a TPAR
Businesses that receive a reminder from the ATO but do not actually need to lodge a TPAR must submit a TPAR Non-lodgment Advice form. This form allows businesses to:
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notify the ATO that they do not need to lodge for one or multiple years
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advise the ATO that they will not be required to lodge TPARs in future years
Submitting this form helps avoid unnecessary follow-up or compliance action from the ATO.
How the ATO uses TPAR data
In the last financial year, around $400 billion in payments made to almost 1.1 million contractors were reported through the TPAR system. The ATO uses this data to identify potential compliance issues, including:
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non-reporting of income
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non-lodgment of tax returns or activity statements
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overclaiming of GST credits
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misuse of ABNs
The ATO recently cited an example where TPAR data was used to identify a sole trader who failed to report more than $80,000 of income from three different companies and failed to lodge activity statements.
Prefilling and transparency for contractors
Information reported in TPARs is also used in the ATO’s prefilling service. This helps contractors include the correct income in their tax returns and provides transparency by showing taxpayers exactly what information has been reported to the ATO about their business transactions.
Businesses that engage contractors should review their obligations carefully and ensure their TPAR is lodged on time to avoid penalties and compliance action.
Speak to one of our accountants if you have any questions about the changes in tax for 2023.
