If your trade business pays subcontractors, there's a good chance you're required to lodge a Taxable Payments Annual Report (TPAR) with the ATO every year. Many tradie business owners either don't know this report exists, or assume it doesn't apply to them. Getting it wrong can attract ATO penalties and shine an unwanted compliance spotlight on your business.

This guide explains exactly who must lodge, what information is required, how to prepare it, and the penalties for non-compliance.

What Is the TPAR?

The Taxable Payments Annual Report is an annual ATO report that businesses in certain industries must lodge, detailing all payments made to contractors and subcontractors during the financial year. The ATO uses this data to cross-check contractors' tax returns — ensuring subcontractors declare income that's been paid to them.

The TPAR is due 28 August each year, covering payments made in the previous financial year (1 July to 30 June).

Who Must Lodge a TPAR?

You must lodge a TPAR if your business:

  1. Is in a TPAR industry (see below), AND
  2. Makes payments to contractors for services in that industry

TPAR Industries

The following industries are required to lodge a TPAR:

  • Building and construction (the original TPAR industry — applies to all builders, tradies, and subcontractors who also pay their own subs)
  • Cleaning services
  • Courier and road freight
  • IT services
  • Security, investigation, and surveillance services
  • Architectural, engineering, and surveying services
  • Mixed service businesses that include one of the above

For the vast majority of tradies — electricians, plumbers, carpenters, painters, concreters, HVAC technicians — the building and construction TPAR obligation applies.

The Threshold

You must lodge if payments to contractors for building and construction services are:

  • 10% or more of your total business income, OR
  • Your business is primarily a building/construction business

For most trade businesses, the building and construction work makes up the majority of income — so the 10% threshold is almost always met.

Who Counts as a "Contractor" for TPAR?

The ATO defines contractors broadly for TPAR purposes. A contractor is any individual, company, partnership, or trust that provides services to your business under a contract — not as an employee.

Included in TPAR:

  • Sole trader subbies who invoice you for labour
  • Company subbies (Pty Ltd) that provide services
  • Partnership subbies
  • Labour hire companies (in some circumstances)

Excluded from TPAR:

  • Payments to employees (these go through Single Touch Payroll, not TPAR)
  • Payments for materials only (no labour component)
  • Payments to foreign entities with no ABN operations in Australia
  • Payments under $10 (practically speaking — below reporting threshold)

Key distinction — materials vs services: If you buy $10,000 in plumbing fixtures from a plumbing supplier, that's a materials purchase — not reportable under TPAR. If you pay a plumber $10,000 to install those fixtures as a contractor, that's a service — reportable.

Mixed payments: If a subcontractor invoices you for both labour and materials on the one invoice (common in trade work — "supply and install"), the entire payment is reportable, not just the labour component.

What Information Must You Report?

For each contractor payment, you must report:

  • Contractor's ABN — Required — if no ABN provided, you should have withheld 47%
  • Contractor's name — Business or individual name as registered
  • Contractor's address — Business address
  • Total amount paid (inc. GST) — The gross amount on their invoices
  • Total GST withheld — Usually $0 — if the contractor is GST-registered, they collect and remit GST themselves. If you withheld 47% for no-ABN, report that

You do NOT need to report:

  • Whether the contractor is GST-registered
  • The purpose or nature of each payment
  • Individual invoice amounts — just the annual total per contractor

How to Prepare Your TPAR

Option 1: From Your Accounting Software

If you've been coding contractor payments correctly in Xero, MYOB, or QuickBooks throughout the year, generating the TPAR is straightforward:

In Xero:

  1. Go to Accounting → Reports
  2. Search for "Taxable Payments Annual Report"
  3. Set the date range (1 July to 30 June)
  4. Review the list of contractors and payment totals
  5. Lodge directly from Xero (if connected to ATO) or export and upload via the ATO's Business Portal

In MYOB:

  1. Reports → GST Reports → Taxable Payments Annual Report
  2. Review and lodge

Key requirement for software to work correctly: You must have each contractor set up as a Contact/Supplier with their ABN entered, and their payments coded to the correct expense account. If ABNs are missing from contacts, the report won't populate correctly.

Option 2: From Manual Records

If you keep payments in a spreadsheet or manually:

  1. List every contractor paid during the year
  2. Sum their total payments (including GST)
  3. Note their ABN and address
  4. Lodge via the ATO's Online Services for Business or through your tax agent

Option 3: Via Your Tax Agent or BAS Agent

Most accountants and BAS agents who handle your tax return or BAS will also prepare and lodge the TPAR. If you use a BAS agent, confirm this is included in their scope of work.

Lodging the TPAR

The fastest lodgement method is through the ATO's Online Services for Business (OSfB) portal, accessible through myGov. You can either:

  • Manually enter each contractor's details
  • Upload a file exported from your accounting software

Via Tax or BAS Agent

Your agent lodges on your behalf. If using an agent, ensure you provide them with your complete list of contractor payments well before the 28 August deadline — they need time to prepare.

A paper TPAR form (NAT 74109) can be downloaded from ato.gov.au and posted. This is slow and prone to errors — use online lodgement wherever possible.

What Happens to the Data After You Lodge?

The ATO uses TPAR data to run automated matching against contractor tax returns. If a subcontractor declares $120,000 in income on their tax return but your TPAR (combined with other clients' TPARs) shows they were paid $180,000, the ATO will investigate.

This is deliberate. The TPAR is a primary cash economy compliance tool. Subcontractors who underreport income — particularly cash-in-hand tradies — are increasingly caught through TPAR data matching.

The flow:

  1. You pay subbie $50,000 for the year
  2. You lodge TPAR showing $50,000 paid to that subbie
  3. The ATO checks the subbie's tax return
  4. If the subbie declared less than $50,000 from your business, they receive a compliance letter

Your obligation ends at lodging accurate TPAR data. What happens to the subcontractor after that is between them and the ATO.

What if a Subcontractor Doesn't Provide an ABN?

If a subcontractor fails to provide their ABN, you are required to withhold 47% of their payment and send it to the ATO. This is the "no ABN withholding" rule.

In practice: Most subbies will quickly provide their ABN when told 47% will be withheld. The rule is designed to be a strong incentive for contractors to get legitimate.

If you've withheld 47% from payments during the year, report these in both the TPAR and the separate PAYG Withholding Annual Report.

Don't let it slide: Paying subbies without an ABN and failing to withhold is non-compliance from your side too — you can be penalised for not withholding when required.

The Penalties for Non-Lodgement

The ATO issues failure-to-lodge penalties for TPAR non-compliance:

  • 1–28 days late: 1 penalty unit ($330)
  • 29–56 days late: 2 penalty units ($660)
  • 57–84 days late: 3 penalty units ($990)
  • More than 84 days late: 5 penalty units ($1,650)

For businesses with a history of non-lodgement, the ATO may escalate to higher penalties or issue amended assessments based on estimated contractor payments.

The ATO also runs targeted programs to identify businesses that should be lodging TPAR but haven't. Supplier data from building merchants and material wholesalers helps identify construction businesses — if you're buying materials at trade, you're probably paying subbies too.

TPAR and Your Accounting Workflow

The best approach is to make TPAR compliance a standard part of your year-round bookkeeping — not an annual scramble.

Monthly workflow:

  • When entering a contractor payment in your accounting software, always include their ABN in the Contact record
  • Code labour and supply-and-install contractor payments to a dedicated expense account (e.g., "Subcontractor Costs")
  • Separate pure materials purchases from labour/supply-and-install to ensure accurate reporting

At year-end (before 28 August):

  • Run your TPAR report from your accounting software
  • Review for missing ABNs — follow up with contractors before lodgement
  • Confirm payment totals match your records
  • Lodge by 28 August

Before engaging a new subcontractor:

  • Request their ABN before the first payment
  • Enter it into your accounting software Contact record immediately
  • If they can't provide an ABN, advise them of the 47% withholding requirement

TPAR vs PAYG Summary — Understanding the Difference

A common point of confusion:

  • TPAR — Payments to contractors for services — You (the principal/business) — 28 August
  • PAYG Withholding Annual Summary (STP) — Tax withheld from employees' wages — You (as employer) — 14 July (STP finalisation)
  • No-ABN Withholding Report — 47% withheld from contractors without ABN — You (the principal) — 28 August

These are three distinct compliance obligations. If you have both employees and subcontractors, you have obligations under all three.

Industry Spotlight: Builders and Head Contractors

If you're a builder or head contractor who:

  • Uses multiple subcontractors (electricians, plumbers, plasterers, painters)
  • Manages construction projects end-to-end
  • Issues invoices for completed projects to clients

Your TPAR will likely list many contractors. Head contractors in the building industry are a primary focus of ATO TPAR compliance campaigns because the volume of subcontractor payments in the industry is enormous — and historically, cash economy activity has been widespread.

Builders who pay subbies in cash and don't lodge TPAR are at very high risk of ATO detection.

Practical Example: A Builder's TPAR for 2024–25

ABC Building Pty Ltd is a small residential builder. During 2024–25, they paid the following subcontractors:

  • JD Electrical Pty Ltd — 12 345 678 901 — $68,750
  • Smith Plumbing (Sole Trader) — 98 765 432 109 — $41,250
  • Fast Concrete Co — 55 444 333 221 — $27,500
  • Paintmaster Pty Ltd — 33 222 111 000 — $19,800

In their TPAR lodged by 28 August 2025, ABC Building reports all four contractors with the above totals.

The ATO cross-references: JD Electrical's tax return should show at least $62,500 in income from ABC Building (the ex-GST amount). If it shows less, JD Electrical receives a compliance contact.

Frequently Asked Questions

Q: Do I need to lodge a TPAR if I paid one subcontractor $5,000 for the whole year?
Yes — if your business is in a TPAR industry and you made payments to contractors. There's no minimum payment threshold that exempts you from lodging. You simply report the one contractor payment.

Q: What if I lodged a TPAR with an error — a wrong ABN or wrong amount?
Lodge an amended TPAR through the same portal. There's no penalty for amending a previously lodged TPAR, provided the amendment is made voluntarily and not under ATO audit direction.

Q: My subcontractors are companies (Pty Ltd) — do I still lodge TPAR?
Yes. TPAR covers payments to individuals, companies, partnerships, and trusts. The legal structure of the contractor doesn't affect the reporting obligation.

Q: I paid a contractor through a labour hire company — do I report the labour hire company or the individual workers?
Report the labour hire company — the entity you actually paid. The labour hire company has their own TPAR obligations for their workers.

Q: I started my business in January — do I need to lodge a TPAR for the first year?
Yes. Even if you only operated for part of the year, you must report all contractor payments made during that period. Lodge a TPAR showing the period from your business commencement date to 30 June.