If your business paid contractors or subcontractors to provide certain services during the 2025–26 financial year, you may need to lodge a Taxable Payments Annual Report.
The TPAR due date for 2026 is 28 August. The report covers relevant contractor payments made between 1 July 2025 and 30 June 2026.
This guide explains who needs to lodge, what information must be reported and what to check before submitting your TPAR.
What Is a TPAR?
TPAR stands for Taxable Payments Annual Report.
It is an annual report that tells the Australian Taxation Office how much your business paid certain contractors and subcontractors for services.
The ATO uses this information to check that contractors are correctly reporting their business income and meeting their tax and GST obligations. From tax time 2026, TPAR amounts will also be used to pre-fill income information for individuals in business.
Who Needs to Lodge a TPAR in 2026?
Your business may need to lodge if it has an ABN, provides a service covered by the taxable payments reporting system and pays contractors to perform that service on its behalf.
Covered services include:
- Building and construction
- Cleaning
- Courier services
- Road freight
- Information technology
- Security, investigation or surveillance
Government entities have separate TPAR reporting obligations for certain payments and grants.
Paying a contractor does not automatically mean that a TPAR is required. The payment must relate to a covered service that the contractor performed on behalf of your business.
What If These Services Are Only Part of Your Business?
An income test may apply when a covered service represents only part of your operations.
For most covered services, you will generally need to assess whether income from those services represents at least 10% of your relevant business turnover. Building and construction businesses have a separate test based on whether 50% or more of their business income came from building and construction services in the current or previous financial year.
The calculation is based on the income your business received for providing the covered service. It is not based on the percentage of income paid to contractors.
For example, an IT consulting business earned A$800,000 during the financial year, including A$120,000 from covered IT services. Because the IT service income represents 15% of its income, the business would then need to assess the contractor payments made for those services.
Businesses with mixed activities should review the ATO tests carefully rather than relying only on their industry description.
What Contractor Payments Must Be Reported?
Report payments actually made during the financial year to contractors who provided covered services on behalf of your business.
If a contractor invoice contains both labour and materials, the full payment is generally reported. An invoice for materials only is not normally included. Reporting is based on payments made, so an invoice that remained unpaid at 30 June is not included in that year’s TPAR.
For each contractor, you may need to report:
- Their name or business name
- Their ABN
- Their address
- The gross amount paid, including GST
- The total GST included
- Any tax withheld where an ABN was not quoted
The figures should agree with your accounting records, contractor invoices and bank transactions.
Payments That Are Generally Not Included
You do not normally report:
- Payments for materials only
- Payments to employees
- Invoices that had not been paid by 30 June
- Payments covered by PAYG withholding
- Private or domestic payments
- Certain payments within consolidated groups
The treatment can be less straightforward when an invoice covers several services or mixes business and private expenses. These transactions should be reviewed individually rather than excluded automatically.
How to Prepare Your TPAR
Most TPAR problems start with incomplete contractor records rather than the lodgment process itself.
Before preparing the report:
- Review the suppliers paid during the financial year.
- Identify contractors who provided covered services.
- Check contractor names and ABNs against their invoices.
- Confirm which payments were made by 30 June.
- Reconcile gross payments and GST to your accounting records.
- Remove excluded payments and duplicate transactions.
- Review the final report before lodging.
Do not assume every supplier coded as a contractor belongs in the TPAR. The nature of the service and the reason the contractor was engaged both matter.
How to Lodge a TPAR in 2026
TPARs must now be lodged electronically. The ATO stopped accepting paper TPAR lodgments after 28 August 2025.
Depending on your business setup, you can lodge through:
- TPAR-enabled accounting software
- Online services for business
- ATO online services through myGov for sole traders
- A registered tax or BAS agent
Businesses using accounting software should check whether the software lodges the report directly or produces an ATO-compatible file for upload.
Can You Lodge a TPAR Through Xero?
Xero can prepare and lodge a TPAR directly in many cases.
Before lodging, review the report rules, contractor contact details and transactions marked for inclusion. Xero identifies missing or invalid information that needs attention before the report can be submitted.
Where direct lodgment is unavailable, the report may be exported in ATO format and uploaded through the appropriate ATO online service.
What If You Have No Reportable Contractor Payments?
Do not lodge an empty report simply because your business lodged one last year.
Where your business no longer needs to lodge a TPAR, you can submit a TPAR non-lodgment advice. This tells the ATO that no report is required and can reduce unnecessary follow-up.
You may also be able to advise that future TPARs will not be required if your business has stopped making the relevant contractor payments. A new TPAR will still be required if your circumstances change later.
Common TPAR Mistakes to Check
Before lodging, look for these common issues:
- Contractors incorrectly treated as employees or vice versa
- Missing or invalid ABNs
- Payments reported from invoices rather than bank transactions
- Incorrect GST amounts
- Materials-only payments included unnecessarily
- Unpaid invoices included in the wrong reporting year
- Contractors left out because they were recorded under an unexpected expense account
- Duplicate payments created during reconciliation
Leaving the review until the final week makes these problems harder to resolve, particularly when contractor information is missing.
What Happens If Your TPAR Is Late or Incorrect?
Failure-to-lodge penalties may apply when an overdue TPAR remains outstanding. The ATO has also advised businesses with overdue reports to lodge them promptly rather than wait for further contact.
If you discover an error after lodging, you can submit an amendment to correct contractor details or payment amounts.
Need Help Preparing Your TPAR?
A clean TPAR depends on accurate bookkeeping, properly classified contractors and reconciled payment records.
Accounting Gurus supports Australian businesses and accounting firms with contractor record reviews, payment reconciliations and TPAR file preparation. Our Melbourne-managed team can work with your existing accounting software and prepare a review-ready file before the 28 August deadline.
Discuss Your TPAR Requirements
TPAR Frequently Asked Questions
1. When Is the TPAR Due in 2026?
The 2025–26 TPAR is due by 28 August 2026.
2. What Does TPAR Stand For?
TPAR stands for Taxable Payments Annual Report.
3. Do Sole Traders Need to Lodge a TPAR?
A sole trader may need to lodge if the business provides a covered service, pays contractors to perform that service and does not qualify for an exemption.
4. Do Payments to Employees Go into a TPAR?
No. Employee payments are generally reported through payroll and PAYG reporting rather than a TPAR.
5. Can a Bookkeeper Help Prepare a TPAR?
A bookkeeper can help review contractor records, reconcile payments and prepare the report. Questions about whether the business is legally required to lodge should be confirmed with a suitably qualified tax professional.
6. Should I Lodge a Nil TPAR?
Where no TPAR is required, the appropriate action may be to submit a TPAR non-lodgment advice rather than lodge an empty report.