The Australian Taxation Office (ATO) wants couriers and road freight businesses to know they are working to level the playing field.
ATO assistant commissioner, Peter Holt said, “We are working to stop businesses gaining an unfair advantage that makes it harder for those who are doing the right thing. 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. In 2019, it further expanded 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 their behalf, they need to record these payments (including cash payments) and check if they need 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 a fair and transparent tax system.
“Many businesses are offering new or expanded services – including courier and delivery services in response to COVID-19 restrictions. 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,” Holt said.
Recording all payments made to contractors will help businesses get it right and make it easier when the time comes to check if the business needs to lodge a TPAR. This information is usually on the invoices from contractors and is the same information used to claim income tax deductions for a tax return and GST credits for BAS.
The TPAR is due by 28 August each year.
Does your business need to lodge a TPAR?
- Follow the ATO three-step guide at ato.gov.au/tpar or talk to a registered tax professional.
- Keep the right records for each contractor – their name, address, ABN, and the total amount paid to them, including any GST.
- The majority of couriers lodged their TPAR online and road freight service providers are encouraged to do the same this year. Lodging online is quick and secure with inbuilt checks. If using accounting software, check it’s TPAR-ready. Talk to a software provider if unsure.
- If the total amount charged to customers and clients for courier or road freight services is 10% or more of annual business income, businesses have to lodge a TPAR by 28 August.
- Watch the new video from the ATO for tips on how to lodge, or watch their webinar for more in-depth guidance.