If your Melbourne business pays contractors in construction, cleaning, IT, couriers, or security, lodging a Taxable Payments Annual Report (TPAR) with the ATO by 28 August each year is likely a legal requirement, not optional.
Most business owners who got caught out didn’t know it applied to them. By the time the ATO makes contact, it’s usually via penalty notice.
This guide covers who needs to lodge, what’s reportable, what’s exempt, and how to get it done before August becomes a pressure point.
What Is a Taxable Payments Annual Report?
Some businesses and government entities in Australia are required to lodge a TPAR each year, reporting every payment made to contractors for relevant services during the financial year (1 July to 30 June).
The ATO introduced it in 2012, starting with building and construction. Contractor use in that industry was high, income under-reporting was widespread, and there was no reliable way to catch it. TPAR changed that. When your business reports what it paid a contractor, the ATO has a figure to compare against the contractor’s own tax return. If the numbers don’t match, the ATO knows where to look.
That cross-referencing capability is why the scheme expanded, cleaning, IT, couriers, road freight, and security services were brought in over subsequent years for the same reason.
Which Melbourne Businesses Need to Lodge a TPAR?
Not every business is required to lodge. But if you operate in one of the following industries and pay contractors for those services, it’s likely you do.
Industries required to lodge:
- Building and construction
- Cleaning services (commercial and residential)
- Courier and road freight services
- Information technology (IT) services
- Security, investigation, or surveillance services
The 10% threshold rule
For most of these industries, TPAR is required if contractor payments make up 10% or more of your total business income for the financial year.
Building and construction is the exception. That threshold sits at 50%.
So if you run a Melbourne cleaning business and contractors account for 10% or more of your income, you’re lodging. If you run a construction company and that figure is under 50%, you may not need to.
One more thing worth knowing: it doesn’t have to be your main activity. If your primary income is retail but you also provide IT services using contractors, TPAR still applies to those contractor payments.
What Payments Do You Actually Need to Report?
Contractors covered by TPAR include subcontractors, consultants, and sole traders, as well as companies, partnerships, and trusts providing services in a reportable industry. If they’re not on your payroll and they’re doing TPAR-applicable work, report the payment.
What the ATO needs for each contractor:
- Their name or business name
- ABN
- Address
- Total amount paid (including GST)
- Any amounts withheld if they didn’t provide an ABN
Most of this information should be on the tax invoices your contractors send you. If it’s not, you’re entitled to ask for a proper invoice.
What’s Exempt From TPAR Reporting?
This is where it gets nuanced, and where Melbourne business owners sometimes get caught out.
Payments for materials only. If a contractor’s invoice is purely for materials with no labour component, those payments are excluded. If it’s a combined invoice for labour and materials, you report the full amount.
Incidental labour. If the labour component is minor and incidental to the supply of goods, for example, a supplier charges a small fee for demonstrating how equipment works, that labour is exempt.
Unpaid invoices as at 30 June. If a contractor invoiced you before EOFY but you hadn’t paid by 30 June, that payment doesn’t go in this year’s TPAR. Report it in the year you actually pay it.
Employee wages. Payments to employees are handled through PAYG and STP. They don’t go in the TPAR.
Payments to foreign residents (in most cases). Payments to foreign contractors are usually subject to PAYG withholding, so they’re excluded from TPAR.
Payments within consolidated groups. If your business and another form a consolidated tax group, internal payments between them don’t need to be reported.
Contractors without an ABN. If a contractor doesn’t provide an ABN, withhold under the PAYG withholding arrangements and report through the correct PAYG channel instead.
When Is the TPAR Due?
28 August each year.
The report covers the previous financial year, 1 July to 30 June, so the August 2025 lodgement accounts for every reportable contractor payment made in that 12-month window.
Mid-July is the practical target for having records in order. Lodgement opens after 30 June, and waiting until August means you’re reconciling under deadline pressure rather than checking your work properly. If you’re on Xero or MYOB, the software handles the report generation and lodgement directly; the setup work is making sure contractor details are recorded accurately throughout the year.
No accounting software? Log in through the ATO’s online services portal using a myGovID account. Paper form NAT 74109 is available, but slower, and confirmation of receipt isn’t immediate, the way it is with electronic lodgement.
What Happens If You Don’t Lodge?
The most common penalty trigger is simply missing the 28 August deadline. The next most common is lodging with incomplete contractor details, wrong ABN, missing address, and payment figures that don’t reconcile. Both are avoidable, and neither gets treated lightly by the ATO.
Over 16,000 penalties have been issued to businesses that failed to lodge, with an average penalty of $1,110. The Failure to Lodge penalty accrues at one penalty unit for every 28-day period the report remains outstanding, so the longer it sits, the higher the figure.
The practical answer is the same as most compliance obligations: records maintained throughout the year, lodgement handled in July, not scrambled in late August.
Practical Tips for Melbourne Small Businesses
A few things that make TPAR easier come lodgement time.
Collect ABNs upfront. Before a contractor starts work, get their ABN. Chasing it down in August is not a good use of anyone’s time.
Use accounting software. Xero and MYOB both have TPAR reporting built in. If contractor payments are tracked properly throughout the year, generating the report takes minutes.
Categorise contractor invoices consistently. Not every contractor payment is reportable; only those in TPAR-applicable industries. Setting up a clear bookkeeping system for flagging these invoices throughout the year saves significant effort at EOFY.
Don’t wait until late August. Lodgement opens after 30 June. If you’re organised, you can prepare and submit in July.
The Bottom Line
TPAR is one of those obligations that catches Melbourne small business owners off guard, usually because no one told them it applied until the ATO followed up.
If you use contractors in a TPAR-applicable industry, the obligation is real, the deadline is fixed, and the penalties for ignoring it aren’t trivial.
The good news: with the right records and accounting software in place, it’s not complicated. The hard part is knowing it applies to you in the first place.
If you’re unsure whether your business needs to lodge or if your contractor records need a cleanup before August, speak with us. We work with Melbourne small businesses in construction, hospitality, retail, and professional services, the kind of businesses where compliance obligations like this tend to sit in the background until they become urgent.
This article is general in nature and isn’t a substitute for advice specific to your business. If you’re unsure about your TPAR obligations, a registered BAS agent or tax professional can give you a clear answer.
