TPAR: Taxable Payments Annual Report — Who Must Lodge, What to Include & the 28 August Deadline

What Is a TPAR?

The Taxable Payments Annual Report (TPAR) is an ATO report that businesses in certain industries must lodge every year. It lists every contractor or subcontractor you paid during the financial year, along with the amount paid and the GST included.

The TPAR exists because the contractor economy has historically been a gap in the ATO's data matching. When you pay an employee, the ATO knows about it immediately through Single Touch Payroll. When you pay a contractor, the only visibility the ATO has is what the contractor chooses to declare. The TPAR bridges that gap — it gives the ATO a cross-reference so they can check that the contractor income you reported paying matches the income the contractor declared.

For businesses in construction, cleaning, IT, couriers, security and similar industries, the TPAR is an annual compliance obligation that must not be overlooked. Non-lodgement penalties apply and the ATO actively pursues businesses in these industries.

Which Industries Must Lodge a TPAR?

Your TPAR obligation depends on the industry your business operates in — not the industry of the contractors you hire. If your business provides services in any of the following sectors and makes payments to contractors or subcontractors, you have a TPAR obligation:

If your business is not in one of these industries, you have no TPAR obligation — even if you engage contractors extensively. For example, a retail business that hires a freelance graphic designer is not required to report those payments.

Who Counts as a Contractor for TPAR Purposes?

For TPAR, a contractor is any individual, company, trust or partnership that:

• Provides services (not goods only) to your business
• Is paid by you, not through a labour hire company that lodges its own TPAR
• Is not your employee under a PAYG withholding arrangement
• Has an ABN (or has withheld at 47% no-ABN rate)

Common examples of contractors you'd include: subbies on a building site paid per job, a freelance IT developer paid for a software project, a cleaning company you hire for your commercial cleaning contracts, a delivery driver paid per delivery as a subcontractor.

You do not report payments to: employees (reported via STP), labour hire workers where the agency reports the payments, suppliers of goods only (e.g. materials suppliers), or contractors for services that are incidental to your business purpose (this is a grey area — seek advice if unsure).

What Information Does the TPAR Require?

The most common error in TPAR preparation is including only the net (ex-GST) payment amount. The TPAR requires the gross amount including GST. Xero's TPAR report (Reports → Taxable Payments Annual Report) automatically calculates both figures from your reconciled transactions.

TPAR Due Date — 28 August Every Year

The TPAR is due on 28 August each year for the previous financial year's payments. There is no BAS Agent extension for TPAR lodgement — the 28 August date is the same for self-lodgers and agent-lodged reports.

The TPAR for FY2024–25 (covering all contractor payments made between 1 July 2024 and 30 June 2025) is due 28 August 2025. If you are in a TPAR industry and have not yet prepared your data, now is the time.

What Happens If You Don't Lodge a TPAR?

The ATO takes TPAR non-lodgement seriously. The consequences are:

1. Failure-to-lodge penalty (FTL): $313 per 28-day period overdue, up to $1,565. A TPAR that is 3 months late costs $939. Larger businesses face higher multiples (2× or 5× for companies with turnover over $1M and $20M respectively).
2. ATO review or audit: The ATO's data matching system compares TPAR data from lodged reports against tax returns. When contractors appear frequently across multiple businesses' TPARs but show low declared income, it triggers a review. Businesses that consistently don't lodge lose the ATO's visibility on whether their contractors are reporting correctly — making the non-lodging business more likely to attract scrutiny itself.
3. No contractor protections: If you pay a contractor who has no ABN and you fail to withhold at 47%, you lose the ability to claim a deduction for that payment. You must withhold if the contractor doesn't quote an ABN, and the TPAR captures those withholding amounts too.

If you have missed TPAR lodgements for prior years, lodge them now with a voluntary disclosure note. The ATO will assess whether to apply penalties but typically applies reduced penalties (or remits them entirely) when the business comes forward proactively.

How to Lodge a TPAR

There are three ways to lodge a TPAR:

1. Via Xero (Recommended)

Xero generates a TPAR directly from your supplier payment data. Go to Reports → Taxable Payments Annual Report. Select the financial year. Xero populates the report using supplier invoices that have been coded to TPAR-eligible expense accounts. Review each contractor line, confirm ABNs and addresses, then submit directly to the ATO via Xero's SBR (Standard Business Reporting) integration.

The key setup step: in Xero, you must mark suppliers as "Reportable for TPAR" in their contact settings. Your bookkeeper should do this at setup, or during the TPAR preparation. If suppliers are not marked, they won't appear in the Xero TPAR report even if you've paid them.

2. ATO Business Portal (Manual)

Log into the ATO's Online Services for Business, navigate to the TPAR section and enter each contractor's details manually or via a CSV upload. The ATO provides a TPAR spreadsheet template you can populate from your records.

3. Through a Registered BAS Agent

Your bookkeeper or BAS agent can prepare and lodge the TPAR on your behalf. True Tally prepares TPAR from Xero data, reviews contractor ABNs using ABN Lookup, and lodges directly through Xero's ATO connection. We check for common errors: missing ABNs, ex-GST amounts entered instead of gross amounts, and contractors incorrectly excluded.

Contractors Without an ABN — What to Do

If you pay a contractor who does not provide an ABN:

• You must withhold 47% of the gross payment amount and remit it to the ATO as PAYG withholding (via your BAS).
• You report the withheld amount on your TPAR under "Tax withheld" for that contractor.
• The contractor can claim back any over-withheld tax when they lodge their tax return.
• You must still pay the contractor the net amount (53% of gross) — withholding is not a penalty on the contractor, it is prepaid tax on their behalf.

The safest approach: require a tax invoice with ABN from every contractor before you make any payment. Make this a standard accounts payable process. Your bookkeeper can set up Xero to flag supplier payments with no ABN on file.

Do I Need to Lodge a TPAR If I Paid No Contractors?

No. Unlike BAS (where a nil return is required), a nil TPAR is not mandatory. If you are in a TPAR industry but made no payments to contractors during the financial year, you do not need to lodge. However, if you are unsure whether any of your payments are contractor payments, it is safer to lodge and include all potentially reportable payments than to assume they are out of scope.

TPAR and Employee vs Contractor Classification

The TPAR obligation shines a light on worker classification. If a worker is misclassified as a contractor when they are legally an employee, the TPAR obligation may appear to be met — but the underlying issue of unpaid super, PAYG withholding and leave entitlements remains. The ATO's worker classification tool is available on their website and uses a set of questions to determine the correct status. The key factors: does the worker set their own hours, use their own equipment, take financial risk, and provide services to multiple clients? If most answers point to employee, they are likely an employee.

With Payday Super now in effect from 1 July 2026, the compliance cost of worker misclassification has increased significantly. If your business uses contractors extensively, a classification review is worthwhile.

Frequently Asked Questions — TPAR