It is late July and the bookkeeper has just been reminded that the Taxable Payments Annual Report is due on 28 August. The building company paid subcontractors from three places last year: subbies on the big jobs were paid through the job system's RCTI run, labour-only subbies went through the payroll system (classified as contractors, not employees), and one-off trades were paid on invoices processed directly in the accounts. Each system has some of the payments. None of them has all of them. And the report the ATO wants needs every contractor payment for the financial year in one list, with ABNs, names, addresses, gross amounts and GST.
This is a common problem in businesses that lodge a TPAR, and it gets worse the more systems are involved. The reporting obligation is straightforward. The data collection, when payments are spread across multiple places, is not.
What TPAR is and who has to lodge
A Taxable Payments Annual Report (TPAR) is a report lodged with the ATO each year that lists payments your business made to contractors for services in certain industries. The ATO uses it to match what contractors report as income against what their clients report as payments (ato.gov.au, Taxable payments annual report).
You must lodge a TPAR if your business pays contractors for services and you operate in any of these industries:
- Building and construction
- Cleaning
- Courier
- Road freight
- Information technology
- Security, investigation or surveillance
The key word is "services." If you pay a contractor to do work in one of those industries, you report it, even if your main business is something else. A manufacturer that hires a cleaning contractor reports those cleaning payments. A wholesaler that uses couriers reports those freight payments. The test is the nature of the service, not only the industry of the payer.
The report covers the financial year (1 July to 30 June) and is due by 28 August. For each contractor, you report their ABN (or a note that one was not provided, which also triggers withholding obligations), name, address, the gross amount you paid them including GST, and the total GST in those payments.
Why payments end up in several systems
In a small business with one accounting system, preparing TPAR is straightforward: run a report of payments to contractor-coded suppliers, check the ABNs, and lodge. But in businesses with job systems, separate payroll, RCTI processes or multiple entities, the payments scatter.
Job system RCTIs. In construction and transport, subcontractor and owner-driver payments are often generated as Recipient Created Tax Invoices (RCTIs) within the job or transport management system. The RCTI is raised against the job, the payment is approved there, and it flows (or is rekeyed) to the accounts for payment. The job system knows the contractor, the job and the amount. The accounts know the payment was made. Sometimes the two do not reconcile perfectly, because credits, retentions and back-charges are handled differently in each system. If you are not familiar with RCTIs, our post on what an RCTI is covers the basics.
Payroll-processed contractors. Some businesses pay certain contractors through the payroll system rather than accounts payable. This happens with labour hire workers classified as contractors, owner-drivers paid on a per-run basis alongside employee drivers, or casual contractors paid weekly alongside staff. These payments sit in the payroll system and may not appear in the accounts payable contractor report.
Direct accounts payable. One-off contractors, the electrician who did a small job, the IT contractor who set up a server, get paid on a standard supplier invoice through accounts payable. They may or may not be flagged as contractors in the system.
Multiple entities. If your business runs several companies or divisions with separate accounting files, each entity's contractor payments are in a different file. The TPAR is lodged per ABN, so each entity lodges its own, but someone has to make sure no payments fall between the cracks when contractors work across entities.
The result is that to produce a complete TPAR, someone has to pull data from the job system, the payroll system and accounts payable, de-duplicate contractors who appear in more than one place, reconcile the totals to what was actually paid, and check that every contractor has a valid ABN on file.
How to prepare during the year instead of scrambling in August
The easiest way to make TPAR straightforward is to set up the data collection before the financial year ends, not in July when it is due. Here is what that looks like.
Flag contractors at the point of entry. In every system where contractors are set up (accounts payable, the job system, payroll), mark them as TPAR-reportable when they are created. Most accounting software has a contractor flag or a TPAR reporting category. The job system may not, in which case the supplier type or payment type can serve as the flag.
Collect ABNs at onboarding. The TPAR requires the contractor's ABN. If you pay a contractor without an ABN, you must withhold from the payment (and report that separately). Check ABNs when the contractor is set up, not in July. The ABN Lookup tool on the Australian Business Register is free, and some systems can validate ABNs automatically. Keep a note of the date you verified each one.
Reconcile contractor payments quarterly. Every quarter (or at least at the half-year), pull a list of contractor payments from each system and compare them. Are the totals consistent? Are there contractors in the job system who are not in the accounts? Are there payments in payroll that should be in the TPAR but are not flagged? Catching these gaps in October or January is much easier than finding them in August.
Keep a master contractor list. One list with each contractor's ABN, name, address, which systems they appear in, and which entity pays them. This does not have to be a new system. A spreadsheet that is checked quarterly works. The point is to have one place where you can see every contractor, rather than relying on each system's supplier list.
Standardise how contractors are identified. If one system records "Smith Plumbing Pty Ltd" and another records "Smith Plumbing P/L" and a third records "J Smith", the de-duplication in August becomes a guessing game. Agree on a naming convention and use the ABN as the unique identifier. Our post on data cleansing before a migration covers the same principle for supplier records.
What connecting the systems looks like
For businesses where contractor payments are spread across three or more systems and the annual TPAR preparation takes days, connecting the data is worth considering.
The simplest version is a scheduled extract: a monthly or quarterly job that pulls contractor payment records from the job system, payroll and accounts payable into a single database or spreadsheet. Each record carries the contractor ABN, name, the system it came from, the date and the gross amount. The extract de-duplicates by ABN, flags mismatches (a different name or address for the same ABN across systems), and totals up the amounts.
At year-end, that extract becomes the basis for the TPAR. Instead of pulling data from three systems in August, you review the running total, check the last quarter's additions, resolve any flagged mismatches, and lodge.
A more connected version has the systems talking to each other continuously: the job system's RCTI payments appear in the accounting system in real time, contractor records are synchronised so ABN and address changes flow through, and the TPAR report can be run at any time during the year to see where it stands. This is the same kind of cross-system connection we build for subcontractor management and RCTI automation.
What not to forget
Mixed payments. A contractor who does both reportable work (building) and non-reportable work (consulting that is not in a reportable industry) may appear in the TPAR only for the reportable portion. Separating these in the source systems makes the report accurate.
Retentions and back-charges. In construction, retentions held from subcontractor payments and back-charges for defect rectification affect the gross amount paid. Make sure the TPAR figure matches what was actually paid, not just what was invoiced or approved. If retentions are released in a different financial year, they are reported in the year the payment is made.
Withholding. If a contractor did not provide an ABN, you should have withheld from the payment. Those withheld amounts are reported separately on the PAYG withholding annual report. Keep the TPAR and withholding records consistent.
Lodging on time. The due date is 28 August. Late lodgement can attract penalties from the ATO. If your business is in one of the reportable industries and pays contractors, the obligation exists whether you have lodged before or not.
Frequently asked questions
Which industries have to lodge a TPAR?
Businesses that pay contractors for services in building and construction, cleaning, courier, road freight, information technology, and security, investigation or surveillance must lodge. The test is the nature of the service, so a business outside these industries that pays for services within them (for example, a retailer paying a cleaning contractor) still reports those payments (ato.gov.au).
When is the TPAR due?
The TPAR for the financial year ending 30 June is due by 28 August each year. The ATO can impose penalties for late lodgement.
What information goes in the TPAR?
For each contractor, you report their ABN (or note that one was not quoted), name, address, the total gross amount paid including GST, and the total GST included in those payments. The amounts are for the financial year.
Do I report payments to companies or only to individuals?
Both. The TPAR includes payments to individual contractors and to companies (Pty Ltd, partnerships, trusts) for services in the reportable industries. The ABN of the entity you paid is reported.
What if the same contractor is paid from two of our systems?
Report the total across all systems under one entry for that contractor's ABN. De-duplicate before lodging so the same payment is not reported twice. This is the main reason to reconcile across systems before preparing the report.
Can our accounting software produce the TPAR?
Most accounting software (including Xero and MYOB) can produce a TPAR if all contractor payments flow through it and contractors are flagged correctly. The problem arises when some payments are in the job system or payroll and not in the accounts, or when the contractor flag was not set at the time. In those cases, the software's report is incomplete and needs supplementing.
Getting help
If your contractor payments are spread across several systems and the annual TPAR is a scramble, book a free initial chat and we will talk through what connecting the data involves. Suggested publish date: early May 2027, before the end-of-financial-year preparation begins. You might also find these useful: