ATO overdue taxable payment reports: Is your business risking a penalty?

The Australian Taxation Office (ATO) has issued a stern warning for all overdue taxable payment reports – lodge your report or risk penalties.

There are 60,000 Australian businesses yet to comply with tax lodgement requirements under the taxable payments reporting system (TPRS) for 2019/20. Unfortunately, the 2020 extension of TPRS means many businesses are unaware of their obligations to report. According to the ATO, this is costing the economy $50 billion – an extraordinary sum considering the 2.4 million Australian businesses, as of 2020.

The reason for the large economic expense is as a result of business cash deals, which according to the ATO Assistant Commissioner Peter Holt, is equivalent to 3 percent of Gross Domestic Product (GDP).

If you have a business that may be obliged to lodge a TPAR report here’s what you need to know:

Extension of the Taxable Payment Reporting System (TPRS) 

The original purpose of TPRS was to identify contractors who did not report or under-reported their income. However, since 2020, this measure was extended to businesses outside the construction, cleaning, and courier industries. The TPRS now also extends to businesses that pay a contractor to provide road freight, information technology, security, investigation, or surveillance services. However, not all businesses need to lodge a report and should speak to their tax practitioner to find out whether they’re obligated.

First developed in 2013, the TPRS increased its resources with the black economy taskforce in 2016. The term “black economy” refers to the segments of Australia’s economic activity that falls outside legal rules and regulations (concerning commerce). The ATO announced in November that regular audits of the TPRS would continue to ensure businesses’ compliance in meeting their income tax and GST requirements.

Obligations to reporting

The extension of TPRS to businesses that pay a contractor to provide road freight, information technology, security, investigation, or surveillance services means that some businesses may be unaware of their obligations.

“Many restaurants, cafés, grocery stores, pharmacies, and retailers have started paying contractors to deliver their goods to their customers. These businesses may not have previously needed to lodge a TPAR. However, if the total payments received for these deliveries or courier services are 10 per cent or more of the total annual business income, you’ll need to lodge.”

– ATO Assistant Commissioner, Peter Holt

For a business that has not yet lodged their annual reports in the TPRS, face penalties for non-lodgement of up to $5,550 (small and medium-sized businesses). However, the ATO is working closely with business and their tax practitioners to support them in meeting their obligations rather than applying penalties in the first instance.

If you think you may be obliged to lodge a TPAR or need advice on any other tax lodgement query speak to your Morrows advisor today.