If your business pays contractors, the end of August brings one of the most overlooked deadlines on the calendar: the Taxable Payments Annual Report, or TPAR. It is due by 28 August each year, and the ATO is no longer quiet about it. In a single recent year the ATO issued more than 11,000 businesses with around $18 million in penalties for overdue TPARs. This is not a form to leave until the last minute.

There is also an important change for 2026 that cuts the other way. If you are a contractor or sole trader who receives those payments, the ATO now pre-fills that income straight into your tax return, and lodging too early can actually cost you. In this guide I will explain who must lodge a TPAR, what the new pre-fill means, why some businesses should deliberately wait until after 28 August before lodging their own return, and how to get the whole thing right. I am Mina Baselyous, a Chartered Tax Advisor (CTA) and CPA, and this is the kind of detail we watch closely for our clients at Pinnacle Accounting & Advisory.

What is a TPAR (Taxable Payments Annual Report)?

A Taxable Payments Annual Report is an annual report to the ATO that tells them how much your business paid contractors and subcontractors during the financial year. It sits under the Taxable Payments Reporting System (TPRS), a data-matching program the ATO uses to catch contractors who under-report their income. In short, the ATO takes what you say you paid your contractors and matches it against what those contractors declared. If the numbers do not line up, the ATO knows exactly where to look.

The system exists to level the playing field. Honest business owners who declare everything should not be competing against operators who quietly leave income off their return. A TPAR is not a tax you pay; it is an information report. But treating it as “just paperwork” is where businesses get caught out, because the penalties for lodging late are real.

Who has to lodge a TPAR?

You may need to lodge a TPAR if your business pays contractors to deliver services in any of these five industries defined under the Taxable Payments Reporting System:

• Building and construction services
• Cleaning services
• Courier and road freight services
• Information technology (IT) services
• Security, investigation or surveillance services

If your business provides one or more of these services and pays contractors or subcontractors to help deliver them, a TPAR is likely on your list of obligations. Government entities have their own reporting rules that also cover grants paid to organisations with an ABN, but for most Melbourne business owners the five industries above are what matters.

A common trap is assuming you are exempt because you are “not really a construction business”. If you are a builder, an electrician, a plumber, a commercial cleaner, a delivery operator, an IT consultancy that subcontracts developers, or a security firm, and you pay other contractors, you are squarely in scope. If that describes you, our guide to tradie tax deductions is also worth a read alongside this one.

The 10% rule: when mixed services trigger a TPAR

Plenty of businesses do more than one thing. A hardware retailer might also offer a delivery service. An IT company might sell hardware and provide support. So how do you know whether a TPRS service is a big enough part of your business to trigger a TPAR?

The ATO applies a 10% test. If the payments you receive for a relevant TPRS service are 10% or more of your total business income for the financial year, you must lodge a TPAR. If they are less than 10%, you do not. The formula is straightforward:

• Total payments received for the relevant service, divided by your current or projected business income, multiplied by 100.

There is one important exception. The 10% test does not apply to building and construction services. If you provide building and construction services and pay contractors for them, you must lodge a TPAR regardless of what percentage of your income they represent. For courier and road freight, you also need to combine the payments for both when working out whether you cross the threshold.

What you actually have to report

For each contractor you paid during the year, your TPAR needs to capture their name, ABN, address, and the gross amount you paid them (including GST). This is why clean records matter so much. If your bookkeeping is behind, or contractor ABNs are missing from your accounting file, TPAR season becomes a scramble.

The good news is that if you keep your books current in software like Xero throughout the year, most of the work is already done. Xero can generate the TPAR from your contractor payment data and lodge it directly to the ATO, provided your contractor records are complete. If you want a walkthrough of the lodgement mechanics, see our guide on how to lodge your BAS using Xero, which covers the same principle of keeping your file ATO-ready. Getting your bookkeeping right during the year is the single biggest thing that makes TPAR painless.

New for 2026: contractor payments now pre-fill your tax return

Here is the big change, and it affects a different group of people. From tax time 2026, the ATO has expanded pre-fill for individuals in business. If you are a sole trader or contractor providing TPRS services, the payments that other businesses report about you through their TPAR will now be pre-filled directly into your income tax return.

In practice, the ATO securely imports that verified data into your return, places the income in the correct labels with GST excluded, and reduces the manual entry you would otherwise do. It applies across industries such as construction, courier and food delivery, and many gig economy platforms. Alongside the contractor income, the ATO is also pre-filling government grants reported through TPAR, your business details such as ABN and address, and last year’s closing stock as this year’s opening stock.

This is genuinely helpful. It means fewer transcription errors and a return that reflects what the ATO already knows. But it comes with a timing catch that most people will not spot until it is too late.

Why you should wait until after 28 August to lodge your return

This is the part to get right, and it is where the two sides of TPAR come together. It helps to separate the two groups of people involved:

• Businesses that pay contractors must lodge their TPAR by 28 August. That deadline has not changed.
• Contractors and sole traders who receive those payments should generally wait until after 28 August before lodging their own income tax return.

The reason is simple. Most TPAR data only becomes available after 28 August, because that is when the paying businesses lodge their reports. If you are a contractor and you lodge your own return in July or early August, the pre-filled contractor income may not have arrived yet. Lodge too early and you risk leaving income off your return, which can lead to omissions, an amendment later, and in some cases repaying a refund you were not actually entitled to.

Lodging after 28 August gives the pre-fill time to fully populate, which means a more accurate return the first time and far less risk of the ATO contacting you down the track. It is one of those small timing decisions that quietly saves a lot of stress.

A word of caution though. Pre-fill is not the complete picture. You still need to include all other income that is not reported through TPAR, such as cash jobs, private clients, and work outside the TPRS industries. You can also review, change and confirm any pre-filled amount before you lodge; if you change a figure, the ATO asks for a short reason code. Good record keeping remains essential even with the expanded pre-fill, because you are still the one signing off on the return.

TPAR deadlines and penalties

The TPAR is due by 28 August each year and must be lodged electronically. If you have determined you do not need to lodge, you can submit a non-lodgment advice form so the ATO knows not to chase you, and you can use the same form to signal that you will not need to lodge in future if you have stopped paying contractors.

Lodging late carries a failure to lodge (FTL) on time penalty. This is calculated at one penalty unit for every 28 days (or part of that period) the report is overdue, up to a maximum of five penalty units. A penalty unit is $330 for infringements up to 30 June 2026 and $364 for those from 1 July 2026 onwards, so a small business lodging its TPAR well past the deadline can face a penalty running into four figures.

There is a sting in the tail that catches many business owners off guard. The ATO generally does not apply an FTL penalty to a late return that results in a refund or nil result, but it specifically carves out third-party data reports like the TPAR from that concession. In other words, “I would not have owed anything anyway” does not protect you on a late TPAR. This is exactly why the ATO was able to issue around $18 million in TPAR penalties in a single year.

If you do miss the deadline and receive a penalty, you can request a remission based on your circumstances, and if a registered tax or BAS agent lodges for you, safe harbour provisions may apply where you gave them everything they needed on time. But the far better position is simply not to be late. If deadlines are your weak point, our full breakdown of BAS and tax lodgement dates puts the whole year on one page.

How to get your TPAR right

Getting TPAR right is less about the report itself and more about the habits behind it. A few things make all the difference:

• Collect ABNs and details up front. Capture every contractor’s ABN, name and address before you pay them the first time, not at the end of the year.
• Keep your books current. If your contractor payments are coded correctly in Xero throughout the year, the TPAR almost writes itself.
• Confirm your industry status early. Run the 10% test each year if you provide mixed services, so you know well before August whether you need to lodge.
• Separate the two obligations. If you both pay contractors and work as a contractor yourself, remember you lodge your TPAR by 28 August but hold off on your own return until after that date.
• Do not ignore a non-lodgment advice. If you genuinely do not need to lodge, tell the ATO so, rather than leaving it and risking reminder letters and penalties.

If you also engage contractors, it is worth checking your obligations do not stop at TPAR. Depending on the arrangement, you may also have super to pay; our guide on whether you have to pay super for contractors covers the trap that catches a lot of businesses.

Frequently asked questions

When is the TPAR due?

The Taxable Payments Annual Report is due by 28 August each year and must be lodged electronically. If you pay contractors in a TPRS industry, mark this date well ahead of time.

Do I have to lodge a TPAR if I only pay a few contractors?

Possibly. For most TPRS industries, you must lodge if payments for the relevant service are 10% or more of your business income and you paid contractors for that service. For building and construction, the 10% test does not apply, so even a small amount of contractor payments can trigger the obligation.

Why should I wait until after 28 August to lodge my tax return?

If you are a contractor or sole trader, the payments reported about you through other businesses’ TPARs now pre-fill your return, but most of that data only lands after 28 August. Lodging earlier risks an incomplete return, an amendment, or repaying a refund later. Waiting gives the pre-fill time to fully populate.

What happens if I lodge my TPAR late?

You can be hit with a failure to lodge on time penalty of one penalty unit per 28 days overdue, up to five units. Unlike some other reports, a late TPAR can attract a penalty even if you would have owed nothing, because it is a third-party data report. The ATO issued around $18 million in TPAR penalties in a single recent year.

What if I do not need to lodge a TPAR anymore?

Submit a non-lodgment advice form to the ATO. This tells them you do not need to lodge for the year, and you can also indicate you will not need to lodge in future if you have stopped paying contractors, which prevents reminder letters and penalties.

Frequently Asked Questions

• Facebook
• Instagram
• LinkedIn
• YouTube
• TikTok
• X