What’s emerging? Penalties for overdue Taxable Payments Annual Report (TPAR)
The ATO will apply failure to lodge penalties for businesses that don’t identify their obligation to lodge TPAR.
22 March 2022
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The ATO have announced that, from 23 March 2022, they will apply failure to lodge penalties for organisations who have TPAR requirements that are overdue.
Background
TPAR is an industry specific report that certain organisations must lodge with the Australian Taxation Office (ATO), in order to provide details of payments made by certain contractors, subcontractors and consultants.
Broadly speaking, TPAR requirements affect some government entities, as well as those engaging contractors, subcontractors or consultants that receive 10% or more of their gross business income from the following activities:
- Building and construction services;
- Cleaning services;
- Courier services;
- Road Freight services;
- Information Technology (IT) services; and
- Security, investigation and surveillance services.
The TPAR is required to be lodged with the ATO by the 28th of August each year.
What’s emerging?
Whilst in our experience, awareness amongst businesses of TPAR reporting requirements and in particular, the breadth of activities encompassed by the regime, is gradually increasing, we continue to encounter businesses that did not identify their obligation to report prior to their industry’s first lodgement deadline.
The Taxation Administration Act 1953 provides for the imposition of an administrative penalty for a failure to report on time, as well as any false statements in the report. We have observed a general level of leniency from the ATO, in relation to such penalties and late TPAR lodgement to date.
As of 23 March 2022, the ATO has indicated that it will apply failure to lodge penalties to those who:
- did not lodge their 2021 or prior year TPAR;
- have already been sent three non-lodgment letters about their overdue TPAR; and
- do not respond to the ATO’s follow-up phone call about their overdue TPAR.
In addition, the ATO have declared that in the coming weeks they may contact tax agents or their clients about their overdue TPARs, in follow up to any non-lodgment letters sent.
Whilst the ATO has been quite lenient in terms of compliance with TPAR measures to date, we anticipate that this is an indication of their intent to sharpen focus on an area often perceived to be the source of income tax revenue leakage.
Given the ATO have publicly announced their intent to commence active monitoring and following up TPAR obligations, and given the potential penalties that may apply for non-lodgement - particularly for Significant Global Entities, we recommend that employers review the list of included activities, determine whether or not the percentage of income threshold is reached for any such activities, and ensure TPAR reports are lodged by the due date - or in the case of overdue reports, lodge as soon as possible.
If you are unsure whether you have TPAR requirements, or have any questions about the failure to lodge penalties, please reach out to your PwC representative.
