The Australian Taxation Office (ATO) tells us it wants a level playing field for couriers and road freight businesses during these difficult times.
“We are working to stop businesses gaining an unfair advantage that makes it harder for those who are doing the right thing,” said Peter Holt, ATO Assistant Commissioner. “It is now more important than ever we create a fair and equal system for businesses in the courier and road freight sector and one way is through the Taxable payments reporting system (TPRS).”
In 2018 the TPRS was expanded to include businesses that pay contractors to provide courier and delivery services on their behalf. And further expanded in 2019 to include businesses that pay contractors to provide road freight services on their behalf. If a business pays contractors to provide courier or road freight services on its behalf, it needs to record these payments (including cash payments) and check if it needs to lodge a Taxable payments annual report (TPAR) reporting these payments to the ATO.
This applies even if courier or road freight services are just a part of the business. The ATO uses this information to check that contractors are reporting all their income as part of the tax system.
“Many businesses are offering new or expanded services, including courier and delivery services in response to COVID-19 restrictions,” said Peter. “The information reported on the TPAR is used to make sure that contractors are reporting their correct income and paying the right amount of tax, so that honest businesses don’t lose out to those under-declaring or not declaring income.”
Recording all payments made to contractors throughout the year will help businesses get it right and make it easier when the time comes to check if a business needs to lodge a TPAR. This information is usually on the invoices received from contractors and is the same information used to claim income tax deductions for the tax return and GST credits for the BAS.
- Under the Taxable payments reporting system (TPRS), if a business provides courier or road freight services and it pays contractors to perform them on its behalf, a business may need to report the payments made to the contractors.
- This applies even if courier or road freight services are only part of business activities.
- A business need to lodge a Taxable payments annual report (TPAR) if the income it received for these services make up 10 per cent or more of the annual business income.
- The TPAR is due by 28 August each year. Businesses who provide courier services who did not lodge a TPAR in 2019 may still need to do so. Visit ato.gov.au/tpar for more information to help.
- Contractors include subcontractors, consultants or independent contractors. They can be individuals, partnerships, companies or trusts.
- Payments to employees are not included. This means that if a business engages a worker and withholds Pay as you go (PAYG) from their pay, they do not include them in the TPAR.
- The ATO uses TPAR data to identify contractors who haven’t lodged tax returns or haven’t included all their income.
- Businesses should visit ato.gov.au/tpar for information and resources.