The TPRS (Taxable Payment Reporting System) is a transparency/anti-evasion measure first applied to construction and building industry. It requires entities to report to the ATO payments they make to contractors. The ATO can then use data matching to determine if the contractors are declaring that income.
In the past it has been limited to the building industry, couriers and cleaners however as of 1 July 2019 the rules will affect companies providing IT services too. IT services is defined as services that are provided in relation to computer hardware or software, or that are provided remotely through the internet. Examples include technical support, computer facilities management, internet and web design consulting.
What is the purpose of the TPRS?
The TPRS through a report named the Taxable Payment Annual Report (TPAR) tells the ATO about payments that are made to contractors for providing services. Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.
What details need to be reported?
The details you need to report about each contractor are generally found on the invoice you should have received from them. This includes:
- their Australian business number (ABN), where known
- their name and address
- gross amount you paid to them for the financial year (including any GST).
When does it start?
Business providing:
- building and construction services
- cleaning services – for contractor payments from 1 July 2018 (first report due by 28 August 2019)
- courier services – for contractor payments from 1 July 2018 (first report due by 28 August 2019)
- road freight services – for contractor payments from 1 July 2019 (first report due by 28 August 2020)
- information technology (IT) services – for contractor payments from 1 July 2019(first report due by 28 August 2020)
- security, investigation or surveillance services – for contractor payments from 1 July 2019 (first report due by 28 August 2020)
What do I need to do to be ready?
Most accounting software will have this built in, it is just a matter of setting it up correctly and collecting the correct information.
If you do not have software or do not know where to start, we suggest that you contact Julius Schoenfeld via email at julius@marinaccountants.com.au or call our office on (03) 9645 9229 to discuss your options. Julius will be able to suggest a software solution that is right for your business and refer you to the accountant in the office who is an expert with this software.
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The above does not constitute personal advice and cannot be relied upon to make any investment decisions. The advice does not take into account the reader’s objectives, situation or needs. You should consider the above with a view to your personal circumstances before making any decisions
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