Last updated: 16 September 2026. Written by the FreeMyCloud team.
A Taxable payments annual report, or TPAR, is a yearly report Australian businesses lodge with the ATO listing what they paid contractors for certain services. It applies to businesses that provide building and construction, cleaning, courier, road freight, information technology, or security, investigation or surveillance services and pay contractors to deliver them. The TPAR for each financial year is due by 28 August, so the 2025-26 report was due on 28 August 2026. Paper forms are no longer accepted, and a business that does not need to lodge can tell the ATO so with a non-lodgment advice form due on the same date.
This article is for businesses that pay contractors. It covers who has to lodge, the 10% and 50% tests, which payments are reportable, how to lodge or fix a report, and late penalties. It does not cover grant reporting by government entities.
Which businesses have to lodge a TPAR?
The ATO calls the regime the Taxable payments reporting system. A business is inside it when three things are true: it provides one of the six covered services, it paid contractors or subcontractors to deliver that service on its behalf during the financial year, and it has an ABN. Payments to employees are never included. They go through Single Touch Payroll.
Contractors in this sense include subcontractors, consultants and independent contractors, whether they operate as individuals, companies, partnerships or trusts.
| Service | Test for a business that also does other work |
|---|---|
| Building and construction | Lodge if the business is primarily in building and construction: 50% or more of income or activity this year, or 50% or more of income last year |
| Cleaning | Lodge if cleaning income is 10% or more of business income |
| Courier and road freight | Lodge if courier and road freight income, added together, is 10% or more of business income |
| Information technology | Lodge if IT services income is 10% or more of business income |
| Security, investigation or surveillance | Lodge if income from these services is 10% or more of business income |
A business under the 10% threshold, or unsure, can still choose to lodge. The ATO’s own starting point is its work out if you need to lodge a TPAR page, which links to a separate page for each service.
How does the 10% test work for a business that provides more than one service?
The 10% test compares what the business received for the covered service with its total business income for the same financial year. It is about income coming in, not contractor payments going out. The ATO sets it out in three steps.
- Add up the payments received for the covered service across the financial year, including work done by employees as well as by contractors.
- Work out business income. A business that traded for the whole year uses its actual income for that year. A business that traded for less than 12 months uses projected income for a full year.
- Divide the first figure by the second and multiply by 100. At 10% or more, with contractor payments for that service during the year, the business must lodge.
Take a hypothetical electrical and data business with $900,000 of income for the year, of which $120,000 came from network design and technical support work. That is 13.3%, so any contractor payments for that IT work are reportable. The electrical work is assessed separately under the building and construction test.
The 10% test does not apply to building and construction. A business is caught if 50% or more of its income or activity this year relates to building and construction services, or 50% or more of its income did last year. That look-back means a business that drops below 50% still lodges for one more year.
Two edge cases come up often. A retailer that arranges installation of products it sells, such as a hardware store organising a skylight fit, is not primarily in building and construction and does not report those installers. And a business that sells goods where delivery is the only way to receive them, such as an online florist with no pick-up option, is not supplying a courier service even if it charges a delivery fee. A restaurant that offers delivery as an option alongside pick-up is supplying one.
What payments go in a TPAR, and what is left out?
The report covers contractor payments for the covered service made between 1 July and 30 June. It is prepared on a cash basis, so an invoice received in June but paid in July belongs to the next year’s report. Where a contractor’s invoice includes both labour and materials, the total is reported.
| Reported | Not reported |
|---|---|
| Contractor payments for the covered service, made on or before 30 June | Invoices still unpaid at 30 June |
| The full invoice where labour and materials are billed together | Materials only, and labour that is only incidental to a supply of materials |
| Amounts withheld from contractors who did not quote an ABN (in the TPAR or on form NAT 3448, not both) | Wages and other PAYG withholding payments to employees, which go through Single Touch Payroll |
| Payments to subcontractors further down the chain, reported by whichever business paid them | Workers engaged through a labour hire or on-hire arrangement |
| Wet hire, meaning equipment hired with an operator, in building and construction | Dry hire of equipment with no operator, and testing and tagging of tools |
| Payments inside a consolidated group, and payments for private or domestic work such as renovating the owner’s own home |
The full list, including the foreign resident rules, is on the ATO’s payments businesses need to report in their TPAR page.
The ATO’s IT services guidance, updated 8 September 2026, states that payments to contractors providing IT services on a business’s behalf are reported whether the contractor is in Australia or overseas, and that there is no exclusion based on the contractor’s location or tax residency. An IT business that left offshore developers out should check its 2025-26 report against that page.
What contractor details does a TPAR need?
For every contractor paid for a covered service, the report carries a short, fixed set of fields. Every one comes out of the bookkeeping file, so the work is record keeping rather than calculation.
- ABN, where known. If a contractor’s ABN changed during the year, each ABN is included.
- Name, either the business name or the individual’s name.
- Address.
- Gross amount paid for the financial year, including GST and any tax withheld.
- Total GST paid to that contractor.
- Total tax withheld where the contractor did not quote an ABN.
The ATO may also ask for a contractor’s phone, email and bank details, and suggests confirming ABN, name and GST registration through ABN Lookup.
The accuracy of these fields matters more than it used to. From tax time 2026, reported amounts are pre-filled into the tax returns of sole trader contractors. A wrong ABN or a GST-inclusive figure keyed as GST-exclusive now shows up in someone else’s return, and the ATO is advising those contractors to lodge after 28 August so the data is there when they do.
How is a TPAR lodged, and how is a mistake corrected?
Lodgment is now electronic only. The ATO stopped accepting paper after 28 August 2025. There are four routes.
| Route | How it works |
|---|---|
| SBR-enabled business software | Prepared and lodged from the software, or a TPAR data file created to the ATO specification and sent through Online services for business |
| Online services for business | Lodgments, then Taxable payments annual reporting. Needs an ABN, a Digital ID and a Relationship Authorisation Manager link. Drafts can be saved |
| Online services for individuals and sole traders | Through myGov: Tax, Lodgments, then Taxable payments annual report |
| Registered tax or BAS agent | Lodged through Online services for agents, where outstanding TPARs show in the client’s lodgment list |
A business that does not need to lodge for a year, for example because it stopped using contractors, submits a non-lodgment advice through the same online services. The form can cover several years at once and can tell the ATO that no TPAR will be needed in future years.
Corrections depend on what was wrong. Wrong amounts, meaning the gross amount, GST or tax withheld, are fixed by lodging an amended TPAR, repeating the payee’s details exactly as originally lodged with only the amounts changed. The ATO says amendments can take up to 28 days to process. Wrong details, such as an ABN, a name or the financial year, are not amended through a new report. They are sent to the ATO by secure mail in Online services for business. A contractor left out entirely is added by lodging another report with the payer’s details and the new payee.
What happens if a TPAR is lodged late?
Late lodgment can attract a failure to lodge penalty. The ATO’s published approach is to warn first: it contacts the business by phone or letter and issues a notice to lodge before a penalty is applied, and it generally does not penalise isolated late lodgments. In March 2026 the ATO told tax practitioners it would apply penalties to clients who had received three non-lodgment letters and still had reports outstanding from 2025 or earlier. It said it issued just over $5 million in penalties the previous year.
The penalty is counted in penalty units. It is one unit for every 28 days or part of 28 days the report is overdue, up to five units, and it is multiplied for larger withholders. The penalty unit is $364 for infringements on or after 1 July 2026, so it applies to a 2025-26 report that missed 28 August 2026.
| Entity size when the report was due | Per 28 days late | Maximum |
|---|---|---|
| Individual or small withholder | $364 | $1,820 |
| Medium withholder (base multiplied by 2) | $728 | $3,640 |
| Large withholder (base multiplied by 5) | $1,820 | $9,100 |
One detail separates this report from a BAS or tax return. The ATO usually does not issue a failure to lodge penalty for a late activity statement or return that produces a refund or nil result. That concession does not extend to third-party data reports, and the ATO names the TPAR as one. No tax is payable on it, but it is still penalised when late. Penalties are not tax deductible.
A business that receives a penalty can ask for remission, but the ATO expects the outstanding report to be lodged first. Where a registered tax or BAS agent was engaged and was given all the information needed to lodge on time, safe harbour provisions may remove the penalty. The detail is on the ATO’s failure to lodge on time penalty page.
What keeps a TPAR accurate through the year?
The report is only as good as the contractor records behind it. Businesses that find August painful are usually rebuilding twelve months of supplier data in a fortnight.
- Contractor records set up once, properly. ABN, legal name, address and GST status confirmed through ABN Lookup when a contractor is first engaged, and re-checked when an invoice shows a different ABN.
- Payments tagged as reportable when they are coded. Where the accounting software supports it, flagging a supplier as TPAR reportable separates a subcontractor from a materials supplier at the time of entry rather than at year end.
- Materials and labour kept distinct. A materials-only supplier and a subcontractor who supplies and installs are treated differently, and the difference is decided by the invoice.
- No-ABN invoices dealt with on the day. A contractor who does not quote an ABN triggers PAYG withholding at the time of payment, which is far harder to correct afterwards.
- A 30 June cut-off check. Because the report is cash based, the payment date decides the year. Unpaid June invoices stay out.
- An annual threshold review. The 10% and 50% tests are applied to each year’s income, so a business whose mix changes can move in or out of the regime.
This is ordinary bookkeeping done consistently, which is why it sits naturally with whoever keeps the books. FreeMyCloud has provided bookkeeping for tradies and construction businesses since 2010, keeping contractor records, supplier coding and reconciliations current so the figures are ready for the business’s registered tax or BAS agent to lodge.
Related reading: bookkeeping for tradies in Australia, contractor bookkeeping in Australia, and BAS due dates in Australia 2026-27.
Contractor records that are ready by August
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Frequently asked questions
When is the TPAR due in Australia?
The Taxable payments annual report is due by 28 August each year and covers contractor payments made in the financial year that ended on 30 June. The 2025-26 TPAR was due on 28 August 2026. A business that does not need to lodge for a year can submit a non-lodgment advice form, which is due on the same date.
Who needs to lodge a TPAR?
A business with an ABN that provides building and construction, cleaning, courier, road freight, IT, or security, investigation or surveillance services, and pays contractors to deliver those services. Where the service is only part of the business, lodgment is required once income from it reaches 10% of business income. Building and construction uses a 50% primary business test instead.
Do payments to employees go in a TPAR?
No. A TPAR only reports payments to contractors and subcontractors, including sole traders, companies, partnerships and trusts. Wages and other payments to employees that are subject to PAYG withholding are reported through Single Touch Payroll. Workers engaged through a labour hire or on-hire arrangement are also left out.
Is GST included in the amounts reported in a TPAR?
Yes. The gross amount paid to each contractor is reported including GST and any tax withheld. The total GST paid to that contractor is reported as a separate figure, and so is any tax withheld because the contractor did not quote an ABN. Amounts are for payments actually made between 1 July and 30 June.
What is the penalty for lodging a TPAR late?
The ATO can apply a failure to lodge penalty of one penalty unit for every 28 days or part of 28 days a TPAR is overdue, up to five units. A penalty unit is $364 for infringements on or after 1 July 2026, so the maximum for a small business is $1,820. Medium withholders pay double and large withholders five times that amount.
Can a TPAR still be lodged on paper?
No. The ATO stopped accepting paper TPAR lodgments after 28 August 2025. It is now lodged through SBR-enabled business software, Online services for business, Online services for individuals and sole traders through myGov, or by a registered tax or BAS agent through Online services for agents.
This article is general information about Australian bookkeeping and reporting obligations, current as at 16 September 2026. It is not tax, financial or legal advice. FreeMyCloud is not a registered tax agent and does not prepare or lodge tax returns. Rates, thresholds and dates change. Confirm your own position with your registered tax or BAS agent.
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