A woman with brown corkscrew curly hair sits in front of a keyboard and Apple computer screen. She wears an orange button-down dress and is holding a mouse in her right hand while cupping her face with her left hand and smiling.

Taxable Payments Annual Reports

Businesses making payments to contractors may need to formally report the payments made during the financial year ended 30 June 2023 by lodging a Taxable Payments Annual Report (TPAR).

Who Needs To Lodge

You will need to lodge a TPAR if you make payments to contractors (including subcontractors, consultants and independent contractors operating as sole traders/individuals, partnerships, companies and/or trusts) and if the contractors offer the following services:

  • building and construction;
  • cleaning;
  • courier and road freight;
  • information technology; and/or
  • security, investigation, or surveillance.

TPARs must be lodged by the 28th of August 2023. Failure to comply may result in penalties. The timely lodgment of TPARs is important as the reported information pre-fills information in Income Tax Returns for sole trader contractors and helps the ATO identify contractors who may not be fulfilling their tax obligations.

The Tax Office provides more guidance on who needs to lodge a TPAR here.
If your business is exempt from lodging this year, please let us know since we can help you avoid unnecessary follow-up by lodging a TPAR Non-Lodgment Advice (NLA).

Updated Guidance on Residency Tests

When it comes to taxation in Australia, an important consideration is whether or not you are a resident for taxation purposes.

The primary test of tax residency is the ‘resides test‘. That is, if you reside in Australia, you’re an Australian resident for tax purposes and you don’t need to apply any of the other residency tests. However, if you don’t satisfy the resides test, you might still be considered an Australian resident for taxation purposes if one of the other three statutory tests applies to you.

It’s important to confirm your residency status for Australian taxation purposes because Australia imposes tax on the worldwide income of its tax residents. This means you may have to provide us with details of:

  • interest earned on overseas bank accounts;
  • foreign pensions received;
  • rent derived from rental properties located outside of Australia;
  • capital gains arising from the disposal of foreign assets like shares or rental properties;
  • foreign employee share schemes; and/or
  • all wages earned in other countries.

Helpfully, the ATO recently published Taxation Ruling 2023/1, providing updated guidance on the use of the four established residency tests for individuals. The ruling outlines the situations where each of the tests is most likely to be relevant. For example:

  • the ‘183 day test’ is more relevant to taxpayers who were not previously residents but have since come to Australia;
  • the ‘ordinary concepts test’ is mostly relevant to taxpayers who are or have been physically in Australia; and
  • the ‘domicile test’ is most likely to apply where a taxpayer has previously been living in Australia but has now either moved overseas or where they frequently travel overseas during an income year.

While the ruling doesn’t cover every conceivable scenario that we as practitioners will encounter, it will be a useful reference point when assisting clients who move between countries.

ATO Email Scam

The screenshot of the scam email below comes to us courtesy of our client Ken, who received this unsolicited email today from “Australia Taxation office”.

As you can see, we have underlined a few dead giveaways that the email is fraudulent, but we also wanted to remind you that email communication from the actual Australian Taxation Office about your tax position will either come through us as your tax agents, or to your myGov inbox and NEVER to your email inbox in a format like the one below.

A screenshot of a phishing email allegedly from the Australian Taxation Office (or as per the image, 'Australia Taxation office').

As always, if you’re uncertain if an email or text message communication is legitimate, it’s a good idea to check with one or two other internet-savvy people BEFORE clicking any links or taking any requested action.

You can also always contact us about any tax-related communications you might receive, and particularly in instances where you are being asked to either make a payment or provide additional personal information.