Key highlights

  • Businesses must report payments to contractors for six service types by 28 August each year.
  • Payments for materials only, incidental labour and unpaid invoices after 30 June are excluded.
  • Amounts are reported in whole dollars, and where an invoice combines labour and materials the total is reported.

Businesses that pay contractors for certain services have to tell the Australian Taxation Office about it every year. Guidance updated by the ATO on 20 October 2026 sets out which payments belong in the Taxable payments annual report (TPAR) and which do not, with worked examples.

What must be reported

The ATO said the TPAR must be lodged by 28 August each year and covers payments made to contractors or subcontractors for building and construction services, cleaning services, courier services, road freight services, information technology services, and security, investigation or surveillance services.

Where an invoice includes both labour and materials, the total payment amount is reported. All amounts are reported in whole dollars, without cents. Only payments made on or before 30 June of the year are reported, so unpaid invoices after that date are left out.

What is excluded

The guidance lists several categories that do not go in the TPAR: payments for materials only, incidental labour, workers engaged under a labour-hire or on-hire arrangement, pay as you go withholding payments such as wages, payments to foreign residents for work in Australia that are subject to foreign resident withholding, payments to foreign residents for work performed overseas, payments to contractors who do not quote an Australian business number, payments within consolidated groups and payments for private and domestic projects.

Foreign-resident payments for work in Australia that are not subject to withholding still need to be reported. Where a contractor does not quote an ABN, the payer may need to withhold an amount, and the ATO said the amount withheld is reported either in the TPAR or in the PAYG payment summary form, but not both.

Examples from the ATO

In one example, a customer buys taps from a hardware supplier for a commercial building, and the supplier installs one tap to demonstrate. Because the labour on the invoice is a small amount incidental to the supply of materials, the buyer does not report the payment.

In another, two companies in the same consolidated group do not report payments between them, because members of a group are taxed as a single entity, but must report payments to businesses outside the group for building and construction services.

Two examples deal with private and domestic work. A homeowner running a design business who manages the construction of a new home is acting in a domestic capacity and does not report payments to contractors. A cleaning agency owner who pays a contractor to clean her own home from a personal account does not report that payment, but must report payments to contractors who clean for her clients. The ATO said payments related to carrying on a business, which can be claimed as tax deductions, must be reported.

Record-keeping worksheet

The ATO offers a Taxable payments reporting worksheet in PDF form to help businesses record contractor payments through the year. It said the worksheet is for the business’s own records and should not be sent to the ATO.