ATO Taxable Payments Reporting System (TPRS) for Builders

What it is

The Taxable Payments Reporting System (TPRS) is an ATO data matching program that requires businesses in specific industries to report payments they make to contractors. The building and construction industry was the first industry brought under TPRS in 2012. Other industries added since include cleaning. Courier and road freight. IT. Security and investigation. Government entities.

The reporting tool is the Taxable Payments Annual Report (TPAR). A builder lodges one TPAR each financial year covering payments made to contractors for building and construction services during that year. The ATO matches the data to the contractors' own tax returns and BAS lodgements to find unreported income.

Who must lodge

A business must lodge a TPAR if it primarily operates in the building and construction industry and pays contractors for building and construction services. The ATO test for "primarily" is 50 per cent or more of business income or business activity in either the current financial year or the previous financial year coming from building and construction services.

"Building and construction services" is defined broadly. It covers activities relating to buildings, structures, works, surfaces or sub-surfaces. Common trades captured include carpentry, bricklaying, plumbing, electrical, painting, plastering, tiling, roofing, concreting, demolition, landscaping that involves construction, site preparation and project management of construction work.

A builder who outsources all trades to subcontractors must lodge a TPAR for those payments. A builder who only employs labour through PAYG employees and uses no contractors has no TPAR obligation but still lodges Single Touch Payroll for the employees.

Deadline and lodgement

The TPAR is due by 28 August each year for the financial year ending 30 June. The 28 August 2025 lodgement covers the 2024-25 financial year. A late TPAR can attract Failure to Lodge on Time penalties under the Tax Administration Act 1953.

From 28 August 2025 the ATO no longer accepts paper TPAR lodgements. Lodgement must be made through ATO Online services for business, through a registered tax or BAS agent's portal, or through compatible accounting software such as Xero or MYOB that supports the TPAR data file format.

A builder who finds an error after lodging can submit an amended TPAR using the same channels. Amending is cheaper than waiting for the ATO to find the error and start a TPRS audit.

Data required for each contractor

For each contractor paid during the year the TPAR records: ABN, name (business or individual), address, gross amount paid for the year (including GST), GST amount included in the gross paid, and any tax withheld where the contractor did not quote an ABN.

The gross amount is the total of all payments to the contractor during the financial year, even if those payments were for multiple jobs. Reimbursements paid to the contractor for materials they purchased on the builder's behalf are included. Payments for materials only (where the contractor only supplied goods, no labour) are excluded.

If a contractor did not quote an ABN at any point, the builder should have withheld 47 per cent (the no-ABN withholding rate) and reported that withholding on the BAS. The TPAR then records the gross paid and the tax withheld.

Practical lodgement workflow

The clean workflow runs through the accounting platform. Each supplier in Xero or MYOB has a "report on TPAR" flag set against their contact record. During the year all invoices from flagged contractors are tagged. At year end the platform generates the TPAR data file which the builder reviews, signs off and lodges.

Builders who do not flag contractors during the year end up doing manual reconstruction in July and August. The reconstruction takes time, introduces errors and risks missing contractors entirely. The clean workflow takes 30 minutes per year. The reconstruction approach takes a full day or more.

Why it matters

TPRS data is the ATO's primary tool for catching contractor income that does not appear on a contractor's tax return. The ATO compares the gross amounts builders report against the income each contractor declares. Mismatches trigger phone calls, letters and in some cases full audits.

For the builder, accurate TPAR lodgement is the cheapest form of audit protection. A contractor caught underreporting income often complains to the ATO that the builder's TPAR was wrong. A clean TPAR backed by tax invoices closes that argument before it starts. A sloppy TPAR opens the door to the ATO reviewing the builder's own records, which then turns into a wider compliance check.