Do I need to lodge a TPAR? A first-timer's guide to paying contractors

Here’s the idea in one sentence: a TPAR is a once-a-year list you give the ATO of the contractors you paid for certain kinds of work, and it’s due by 28 August.

If you’ve just taken on your first subbie, cleaner or driver, there’s a decent chance nobody mentioned it. It’s not a tax bill and it doesn’t change what you owe. It’s a report. But it has a deadline, the ATO does check it, and the easiest time to set it up is now, in November, not the week before it’s due. This guide covers who has to lodge, what goes in, and a simple routine that makes the report a ten-minute job.

What is a TPAR, and why does the ATO want it?

The letters stand for taxable payments annual report. Think of it as the other half of a contractor’s tax return. Your contractor says “I earned this much.” Your TPAR says “I paid them this much.” The ATO puts the two side by side.

That matching is more active than it used to be. The ATO says it pre-fills TPAR-reported contractor payments into eligible tax returns. For Tax Time 2026 it says about $21 billion of reported contractor payments was pre-filled, and it estimates more than $1 billion of TPAR-reported payments could be missing or under-reported. In plain terms: the data you report is being used, so it’s worth getting right.

Do I need to lodge a TPAR? A quick check

You generally need to lodge if all three of these are true:

1. You’re in business (sole traders count) and trade under an ABN.
2. You pay contractors, not staff on your payroll, for work in one of these industries:
   • building and construction (trades, subbies)
   • cleaning
   • couriers and road freight
   • IT services
   • security, investigation or surveillance work
3. That work is a meaningful share of what your business does. The ATO’s test looks at how much of your GST turnover comes from the covered services, and the cut-off differs by industry. Check yours on the ATO’s TPAR page instead of guessing.

Here are some examples of how that plays out. Illustrative only.

• Priya runs a small cleaning company and pays two self-employed cleaners to cover extra shifts. Cleaning is her main income and she’s paying contractors for cleaning. Likely yes.
• Tom is a builder who pays a sparky, a plasterer and a tiler as subcontractors. Building and construction is his business. Likely yes.
• Jess has a café and once paid a freelancer to fix her website. Cafés aren’t a covered industry and one web job isn’t her business’s main income. Likely no.
• Dan runs a courier round using drivers on their own ABNs. Courier and road freight is covered. Likely yes.

If you’re on the fence, the ATO’s own guidance has the final say. And if you end up needing to lodge, you’ll be glad you started keeping records months ago.

What goes in the report?

The report is one line per contractor. Each line carries:

• the contractor’s ABN, or their name and details if they didn’t supply one
• the business name and address from their invoice
• the total you paid over the year, plus how much of it was GST

Two details that catch beginners:

• Employees are out. Wages go through your payroll reporting. Our contractor vs employee guide shows how to tell which one someone is, because getting that wrong skews everything downstream.
• Materials-only payments are generally out. If a tradie supplies materials and labour on one invoice, ask for the two to be itemised. It makes the report simple and the paper trail clear.

Check what your software calls “gross”: the ATO’s form asks for the total paid including GST, and some programs show ex-GST figures by default.

When is the TPAR due, and how do I lodge it?

28 August, for the year that ended on the previous 30 June. So the report you lodge in August 2027 will cover 1 July 2026 to 30 June 2027.

You can lodge through the ATO’s online services, through accounting software that supports TPAR, or via a registered tax agent. Most small businesses on Xero, MYOB or QuickBooks can generate it from contractor payments they’ve tagged during the year. That “tagged during the year” part is the whole secret.

A first-year routine that makes August painless

Here’s the order that works for most beginners.

1. Mark contractors as contractors. In your software, set up each one as a supplier with their ABN and address recorded the first time you pay them. Asking for an ABN after the fact is awkward. Asking at the start is routine.
2. Flag covered payments. Most software lets you tag a supplier or account as a taxable-payments category so the totals build themselves.
3. Ask for itemised invoices. Labour and materials on separate lines.
4. Check at the end of June. Run the contractor payments report for the year, look for anyone missing an ABN, and fix it while the details are fresh.
5. Put the date in your calendar. Set a reminder for mid-August, a week or two ahead of 28 August.
6. Keep the evidence. Invoices, payment records and the lodged report sit with your other records. Our guide to how long to keep business records covers the period.

If you’d like to talk through a first funding plan for taking on contractors, you can see if you qualify in about a minute.

What if I don’t need to lodge?

Perhaps reminder letters are arriving, or you once used contractors and no longer do. Don’t sit on them. File a non-lodgment advice: a short form saying no report is due for the year, or for later years too if the contractors are gone. One form can cover several years.

The reason is practical. The ATO has said it applies failure-to-lodge penalties to businesses that have been sent repeated reminders about an overdue TPAR and still haven’t lodged. A one-page advice avoids all of that.

What happens if I lodge late, or get it wrong?

A late TPAR can draw a penalty even though no tax is payable on it. The ATO counts penalty units in 28-day blocks, stops at a ceiling, and indexes the unit’s dollar value, so look up today’s figure on its site. The practical points are simpler:

• Late is better than never. Lodge as soon as you notice, and don’t wait for the third letter.
• Mistakes can be corrected. If you find an error after lodging, ask your tax agent or the ATO how to amend.
• Your contractors are affected too. The ATO has told contractors that most of the TPAR data won’t be available for pre-fill until after 28 August and that their returns may be adjusted by what’s reported. A missing or wrong TPAR can mean questions come back to you from the people you pay.

Myths about TPAR

“It’s only for big businesses.” No. A one-person builder paying a single subcontractor can be caught.

“I paid them in cash, so it doesn’t count.” The report is about what you paid, however you paid it. Cash is the riskiest way to leave a trail.

“I’ll find out if I need it.” The ATO uses its own data to chase TPARs. Waiting to be told is the expensive way to learn.

“If they don’t give me an ABN, I’ll skip them.” Not having an ABN raises a separate withholding question you should check with the ATO or your accountant. It doesn’t remove the payment from your records.

How does the TPAR connect to getting a loan?

More than you might think. A lender reading your books isn’t looking at the TPAR itself, but they notice the same things the TPAR relies on: tidy supplier records, contractors paid by bank transfer, and lodgements made on time. If you’re hoping to apply in the next year or two, these habits make life easier. Our documents explained lesson shows what lenders usually ask for, and the ABN and GST lesson covers the registration side. The same neat trail also helps when you lodge your first BAS and your first EOFY.

Growing a team of contractors? Here’s the next step

Taking on contractors is usually a sign the work is coming in. It’s also when cash gets tight: you pay people before the customer pays you. If you’re weighing up funding to carry that gap, finding out where you stand is free of worry.

The enquiry takes about a minute, and since there’s no credit check when you first enquire, asking won’t leave a mark on your credit file. We don’t send your details to a pile of lenders, so you won’t get a flurry of calls. A real person reads your situation and rings you to explain what’s realistic. All we ask is that you fill the form in accurately, so we can match you to the right option first time.

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