Bookkeeping for Tradies in Australia: TPAR, GST, Vehicle Claims, and Subcontractor Rules

The ATO doesn’t come after Australian tradies for the big stuff first. It comes after them for the things they didn’t know they had to do — a TPAR that wasn’t lodged, a vehicle claim that wasn’t documented, a subcontractor who should have been on the books as an employee. Bookkeeping for tradies in Australia is less about balancing ledgers and more about knowing exactly which obligations apply to your trade business and staying ahead of them before they become problems.

TPAR: the ATO obligation most tradies find out about too late

If your trade business pays subcontractors for building and construction services, you’re almost certainly required to lodge a Taxable Payments Annual Report (TPAR) with the ATO by 28 August each year. The report lists every contractor you’ve paid during the financial year — their ABN, name, address, and total payments received.

The industries required to lodge TPAR include building and construction, cleaning, courier and road freight, IT, and security services. The obligation kicks in once you pay $75,000 or more to contractors in a financial year. Most trade businesses with even a handful of regular subbies clear that threshold quickly.

To prepare TPAR correctly, your bookkeeper needs a record of every contractor payment made during the year — the contractor’s ABN, their full business name, and the gross amount paid including GST. This is only possible if subcontractor invoices are captured and coded consistently throughout the year. Trying to reconstruct this at tax time from bank statements is slow and error-prone.

The $75,000 GST threshold: what it means in practice

Once your business GST turnover reaches $75,000 in any 12-month period, you’re required to register for GST within 21 days and start charging 10% on your invoices. Most tradies who’ve been in business for a year or two are over this threshold — it’s a low bar. But the common mistakes happen at the edges.

Charging GST before registering. If you invoice with GST before you’re registered, you’ve collected a tax you’re not yet entitled to remit — which creates problems on both sides of the transaction.

GST on materials vs labour. Most tradie invoices contain both labour and materials. Both attract GST. If you’re buying materials and on-charging them to a client, you claim the GST credit on your purchase and charge GST on the sale. The margin between cost and charge-out is taxable. The GST credits you claim on materials are only claimable if you hold a valid tax invoice from the supplier — a receipt isn’t always sufficient.

BAS timing. Most trade businesses lodge BAS quarterly. The quarterly periods end 31 March, 30 June, 30 September, and 31 December, with lodgement due 28 days after each quarter end (or later if lodging through a tax agent). Late lodgement penalties start at $222 per 28-day period and compound. For BAS compliance and deadlines, see the BAS and ATO page.

Subcontractor or employee: the distinction the ATO is actively testing

Engaging a worker as a subcontractor rather than an employee reduces your super, PAYG, and leave entitlement obligations significantly. It’s also legitimate — most of the trade industry runs on genuine subcontracting arrangements. The problem is that some arrangements labelled as “subcontracting” are, in substance, employment — and the ATO uses data matching to find them.

The multi-factor test that determines worker classification considers:

• Control: Does the worker decide how and when the work is done, or do you direct them?
• Tools: Does the worker supply their own tools and equipment, or use yours?
• Financial risk: Can the worker make a loss on the job, or are they simply paid for time?
• Exclusive engagement: Does the worker work for multiple clients, or only your business?
• Subcontracting: Can the worker send someone else to do the job, or must they personally attend?

A sole trader electrician who quotes jobs, provides their own tools, invoices per project, and works for multiple builders is a contractor. A labourer who shows up when you tell them to, uses your tools, works exclusively for your business, and has done so for two years is likely an employee — regardless of the ABN on their invoice. From 1 July 2025, employers must pay 12% superannuation on ordinary time earnings for employees. Misclassification means owing that super plus the Superannuation Guarantee Charge (interest plus penalties) for every period since the arrangement began.

Vehicle and tool deductions: what gets claimed vs what gets accepted

Vehicle and tool deductions are the most valuable — and most scrutinised — claims for trade businesses. The ATO reviews these closely because they’re high-dollar and often claimed without adequate documentation.

Work vehicles. The logbook method lets you claim the work-use percentage of all vehicle running costs — fuel, insurance, registration, servicing, and decline in value. You need a 12-week logbook maintained at least once every five years that records the date, purpose, odometer start/end, and kilometres for every trip. Without a valid logbook, the ATO can disallow the entire vehicle claim. The cents-per-kilometre method (88 cents per km in 2024–25, capped at 5,000 km) doesn’t require a logbook but is capped well below what most tradies actually spend on vehicles.

Tools and equipment. Tools used for work are deductible. The deduction method depends on the cost — items under the instant asset write-off threshold (currently $20,000 for small businesses to 30 June 2025) can be written off immediately. More expensive items are depreciated over their effective life. The key requirement is a receipt and a clear business-use purpose. A $4,000 tool kit purchased in June without a receipt is unsubstantiated and will be disallowed in an audit.

Payroll under the Construction Award — what trade employers need to apply correctly

Tradies who employ staff rather than just using subbies need to apply the Building and Construction General On-site Award 2020 (MA000020) for on-site construction workers, or the relevant trade award for off-site or specialist trades. The Award sets minimum rates by classification, allowances for specific work (confined spaces, heights, toxic materials), and overtime provisions.

The allowances are the part most employers miss. Workers required to work in confined spaces, at heights over 6 metres, or handling specific materials are entitled to allowances on top of their base rate — per hour or per day depending on the allowance type. These aren’t negotiable. They’re conditions of the Award and apply regardless of what the employment contract says.

The tradies who stay out of ATO trouble aren’t doing anything special. They’re keeping current records, lodging on time, documenting every deduction claim, and having someone who knows TPAR check their subcontractor payments before 28 August. That’s not complicated — it just requires consistent attention that most tradies don’t have time for when they’re on the tools.

The Free My Cloud tradies bookkeeping page covers what a dedicated bookkeeper handles for trade businesses. For subcontractor-heavy businesses, see also the contractors bookkeeping page. The payroll services page covers Construction Award payroll specifically. Use the savings calculator to see what outsourced bookkeeping would cost, or get in touch directly.