You Pay Subcontractors, And That Has To Be Reported
You bring in a subbie for the job.
They send an invoice. You pay it.
Job done, as far as you are concerned.
For a lot of businesses, it isn't.
If your business provides certain services and pays contractors to deliver them, you may need to report those payments to the ATO every year.
It is called the Taxable payments annual report, or TPAR.
The TPAR is due by 28 August each year.
The ATO uses it to check that contractors are declaring the income they earn.
Late or missing reports can attract ATO penalties.
Paying the subbie is only half the job. Reporting what you paid them is the other half.
Who Needs To Report
It depends on the work you pay contractors to do.
The ATO lists these services:
Building and construction
Cleaning
Courier
Road freight
Information technology (IT)
Security, investigation or surveillance
If your business is mainly in building and construction and you pay contractors for that work, you will usually need to lodge.
For the other services, you generally need to lodge if they make up 10% or more of your business income.
It is worth checking each year, because the answer can change. If you find you don't need to lodge a TPAR for a year, you can let the ATO know with a non-lodgment advice.
What Goes In The Report
For each contractor you paid, the report covers:
Detail | What it means |
ABN | The contractor's ABN, if you know it. Every ABN they used, if it changed. |
Name | Their business name or their own name |
Address | Where they can be contacted |
Gross amount paid | The total for the year, including GST and any tax withheld |
GST | The total GST included in what you paid them |
Tax withheld | Any tax you withheld because they did not quote an ABN |
If an invoice covers both labour and materials, you report the whole amount, unless the labour is only incidental to supplying the materials.
Payments for materials only, and payments to your own employees, do not go in. Employee pay is reported through payroll instead.
Where It Goes Wrong
The report itself is not hard. Finding the information at the end of the year is.
Contractor details are missing
No ABN on file. An old address. A name that does not match the invoices.
Chasing that up months later takes far longer than getting it right on day one.
Payments are coded to the wrong place
Subbie payments land in general expenses, materials, or a suspense account.
Then nobody can pull a clean total for each contractor.
Nobody owns it
Everyone assumes someone else is looking after it. Then it turns up as a job nobody planned for.
Getting It Right All Year
None of this needs a big system. It needs a routine.
1. Collect contractor details before the first payment
ABN, legal name, address. Check the ABN is active before you pay.
2. Set each contractor up properly in your software
Most accounting software can flag a supplier as reportable. Set that up once, and the totals build themselves.
3. Code every payment as it happens
Labour and materials on the same invoice still count as one reportable payment. If an invoice covers labour and materials, report the whole amount, unless the labour is only incidental to supplying the materials.
4. Check the totals before the year ends
A quick look at each contractor's total is far easier in May than in August.
5. Know who is lodging it
Your office person, your accountant, or both. Just make sure it has a name next to it.
There is no TPAR tool on our Free Tools page, because the useful version is your own contractor list, set up properly in your own software. That is something we set up with you.
Who Keeps The Contractor Records?
In most Australian businesses like yours, someone in the office is already entering the subbie invoices.
They are the right person to keep the contractor details current and the payments coded properly.
They just need to be shown how, and given a simple routine to follow.
→ We train your office person to set up contractors properly and code their payments as they go.
→ We review the books, look after the lodgements, and prepare the report from records that are already right.
→ You know who you paid, what you paid them, and that it has been reported.
Because we are already in your numbers for the normal compliance work, the conversation about your contractors happens as part of it.
Which jobs lean hardest on subbies. Where the costs are going. Whether the mix still makes sense.
It is not a separate project. It comes from keeping the books right.
A Quick Self-Check
Take a minute and answer these honestly.
Question | Yes / No |
Do you know whether your business needs to lodge a TPAR? | ☐ |
Do you have an ABN, name and address on file for every contractor? | ☐ |
Are contractor payments coded so you can see each one's total? | ☐ |
Are invoices with labour and materials reported in full, unless the labour is only incidental? | ☐ |
Is one person clearly responsible for lodging the report? | ☐ |
If several answers are "No", you are not doing anything wrong.
The information just is not being captured in a way that makes the report easy.
That is fixable.
Final Thought
Paying subcontractors is part of how the work gets done.
Reporting those payments is part of the deal.
When the contractor details are on file and every payment is coded as it happens, the report is a short job, not a scramble.
You stay on the right side of the ATO, and you get a clearer view of where your money goes.
You'll know what to do next.
Next Step
Not sure whether you need to report your contractor payments, or whether your records are ready? We can look at how your contractors are set up today and what it would take to make the report easy.
Book a call with our team.
This article is general information only. It does not take your circumstances into account and is not tax or financial advice.
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