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The Australian Taxation Office (ATO) has issued a warning to businesses that pay contractors to meet lodgement requirements under the Taxable Payments Reporting System (TPRS).

The ATO yesterday confirmed more than 60,000 businesses haven’t yet complied with lodgement requirements under the Taxable payments reporting system (TPRS) for 2019-20.

The TPRS is a black economy measure designed to assist the ATO identify contractors who don’t report or under-report their income.

ATO assistant commissioner Peter Holt explained that the Black Economy Taskforce estimated that the black economy is costing the community as much as $50 billion, which is approximately three per cent of Gross Domestic Product (GDP).

The ATO estimates that around 280,000 businesses need to lodge a Taxable payments annual report (TPAR) for 2019-20.

Holt also clarified that it is not just businesses that pay contractors in the building and construction industry that need to lodge a TPAR. 2020 was the first year that businesses that pay contractors to provide road freight, information technology, security, investigation, or surveillance services may need to lodge a TPAR with the ATO.

This is in addition to those businesses providing building and construction, cleaning, or courier services.

“As any good tradie will tell you, the spirit level is a critical tool to ensure construction work is being done on the level. I like to think of the TPRS as a bit of a spirit level for tax obligations,” Holt said.

“Our role is to make sure the ‘bubble’ is centred as much as possible to keep things on the level and fair for everyone.”

Businesses who have not yet lodged need to as soon as possible, to avoid penalties as forms were due by 28 August 2020 and are now well overdue.

Holt acknowledged that some businesses may not realise they need to lodge a TPAR but may be required to, depending on the percentage of payments received for deliveries or courier services. “Many restaurants, cafés, grocery stores, pharmacies and retailers have started paying contractors to deliver their goods to their customers. These businesses may not have previously needed to lodge a TPAR,” he said.

“However, if the total payments received for these deliveries or courier services are ten per cent or more of the total annual business income, you will need to lodge.

“We have welcomed the collaborative way the building and construction industry has continued to work with the ATO to ensure the success of the TPRS, through regular engagement with head contractors across the industry.”

More information and resources like videos, fact sheets, and webcast recordings, and examples to help businesses and their advisers work out if they need to lodge, how to lodge, and what to report is available at ato.gov.au/TPAR.

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