If you run a building or construction business and pay subcontractors, you almost certainly need to lodge a Taxable Payments Annual Report (TPAR) with the ATO every year by 28 August. Miss it, and you face penalties starting at $330 per month — with the ATO having already issued over $18 million in fines to 11,000+ businesses for getting this wrong.
This guide explains TPAR in plain language, for the builder sitting down on a Sunday night wondering what the ATO actually needs from them. Not for accountants, not for HR.
What is TPAR?
The Taxable Payments Annual Report is an annual report you lodge with the ATO that lists every payment you made to contractors for building and construction services during the financial year (1 July to 30 June).
The ATO uses TPAR data to check whether your subcontractors are reporting all their income and paying the right amount of tax. Put bluntly: it is the ATO's way of catching subbies who under-report their earnings.
TPAR is separate from Single Touch Payroll (STP), which reports payments to your employees. Employees go through STP. Contractors go through TPAR. Never double-report.
Source: ATO — Taxable Payments Annual Report
Do you need to lodge a TPAR? (The 50% rule)
You must lodge a TPAR if 50% or more of your business income or activity comes from building and construction services — either in the current financial year or the year before.
"Building and construction services" is defined broadly by the ATO. It includes:
- Bricklaying, carpentry, joinery, electrical, plumbing, painting, tiling
- Demolition, excavation, landscaping, fencing
- Project management and site supervision
- Cabinet making and off-site fabrication for installation on a building site
- Wet hire (equipment rental WITH an operator) — reportable
It does not include:
- Dry hire (equipment rental WITHOUT an operator — bobcats, scaffolding, tippers) — not reportable
- Testing and tagging
- Payments to employees (those go through STP)
- Payments for materials only, with no associated labour
If you are a builder, renovation company, civil contractor, or trade business paying subbies, you almost certainly hit the 50% threshold.
Source: ATO — Building and Construction Services
What payments do you report?
For each contractor you paid during the financial year, your TPAR must include:
- Their ABN (if they have one — verify via ABN Lookup)
- Their name (business or individual)
- Their address
- Total gross amount paid (including GST), in whole dollars
- Total GST included in those payments
- Total tax withheld (where the contractor did not quote an ABN, you must withhold 47%)
What to exclude:
- Payments to employees (STP handles those)
- Payments for materials only, with zero labour component
- Payments where labour was only a minor or incidental part of a materials purchase
Source: ATO — Payments Businesses Need to Report in Their TPAR
The 28 August deadline
Your TPAR for the financial year ending 30 June is due by 28 August each year. The FY2025-26 TPAR is due 28 August 2026.
Major change from 2025: Paper lodgement has been discontinued. From 28 August 2025, all businesses must lodge online — via the ATO Business Portal, SBR-enabled accounting software, or through a registered BAS or tax agent.
If your business no longer makes contractor payments or has closed, lodge a Non-Lodgement Advice to avoid the ATO chasing you.
Source: ATO — Lodge Your TPAR
Penalties for missing TPAR
The ATO actively enforces TPAR. The penalty structure:
| Entity Size | Annual Turnover | Penalty Per 28-Day Period | Maximum (5 Periods) |
|---|---|---|---|
| Small | Under $1M | $330 | $1,650 |
| Medium | $1M — $20M | $660 | $3,300 |
| Large | Over $20M | $1,650 | $8,250 |
The penalty unit value is $330 as of November 2024 (ATO — Penalty Units). The ATO starts the clock after sending 3 reminder letters about your overdue TPAR.
Recent enforcement:
- The ATO issued 16,000+ penalties for overdue TPARs in a single enforcement round (ATO, 2023).
- In an earlier round, the ATO issued $18 million in penalties to 11,000+ businesses (ATO, 2022-23).
- One significant global entity received a $639,600 penalty for a late TPAR — which subsequently revealed over $190 million in contractor payments (ATO, 2024-25).
These are not obscure rules that nobody enforces. The ATO is actively issuing thousands of fines every year.
TPAR vs STP
This trips up a lot of builders. The short version:
| STP (Single Touch Payroll) | TPAR | |
|---|---|---|
| Reports on | Employees | Contractors |
| Frequency | Every pay run | Once per year |
| Due date | Each payday | 28 August |
| Data reported | Salary, wages, PAYG withholding, super | Gross payments, GST, tax withheld |
| Mandatory for | All employers | Building & construction (+ cleaning, courier, IT, security, road freight) |
If you pay someone as an employee (PAYG, super, leave entitlements), they go through STP. If you pay someone as a contractor (ABN invoice, no super, no leave), they go through TPAR.
Getting this classification wrong has consequences beyond TPAR — it can trigger sham contracting penalties. See our guide on ABN vs Employee in Construction.
Sources: ATO — Single Touch Payroll, Small Business Tax Super and You
10 common TPAR mistakes
- Reporting employee payments in TPAR — employees go through STP, not TPAR.
- Missing the 28 August deadline — set a calendar reminder for July to start preparing.
- Incorrect or missing ABNs — verify every subbie's ABN at abr.business.gov.au before lodging.
- Misclassifying workers — use the ATO contractor vs employee tool if unsure.
- Reporting material-only payments — only report payments with a labour/service component.
- Reporting dry hire as construction — equipment rental without an operator is excluded.
- Rounding errors — amounts must be in whole dollars.
- Not keeping records — retain TPAR records for at least 5 years.
- Failing to lodge a nil report or Non-Lodgement Advice — this triggers ATO follow-up letters.
- Not checking contractors' GST registration — affects the GST amount you report.
Sources: Agile Bookkeeping — Top 10 TPAR Mistakes, Carbon Group — TPAR 2025
How digital time tracking simplifies TPAR
Nobody else seems to connect these dots: your TPAR is only as accurate as your records of who you paid, how much, and for what work.
If you track contractor attendance and payments digitally, you already have most of what you need for TPAR:
- Contractor details (name, ABN) stored in your system from onboarding
- Payment amounts calculated from verified hours and agreed rates
- GST status confirmed when you set up the contractor
- Work descriptions linked to specific sites and time periods
Rather than scrambling through bank statements and paper invoices in August, builders using tools like SkillsDock can pull contractor payment summaries directly from their tracked data. The information flows: clocked hours → verified timesheets → payment records → TPAR data.
You still need your accountant. But they will thank you for handing them clean data instead of a shoebox full of receipts.
Payday Super and TPAR
From 1 July 2026, Payday Super requires employers to pay superannuation at the same time as wages — not quarterly.
Why does this matter for TPAR? Because the contractor vs employee classification question gets sharper:
- True contractors (own ABN, genuinely independent) → reported through TPAR annually
- "Deemed employees" for super purposes (contractors who are really employees, certain directors) → must now go through STP + Payday Super every pay run
If you have been treating someone as a contractor and paying them quarterly super "just in case," Payday Super forces the question. Are they really a contractor (TPAR), or are they actually an employee (STP + Payday Super per payroll)?
Getting this wrong now has payday-frequency consequences, not just quarterly ones.
Sources: ATO — About Payday Super, Alvarez & Marsal — Payday Super Royal Assent
TPAR preparation checklist
Use this checklist from July each year:
- Confirm you meet the 50% building & construction threshold
- Verify all contractor ABNs via ABN Lookup
- Confirm each contractor's GST registration status
- Compile total gross payments (incl. GST) per contractor for the year
- Calculate total GST per contractor
- Record any amounts withheld (47% where no ABN was quoted)
- Check you are not double-reporting employees already in STP
- Exclude dry hire and material-only payments
- Lodge online by 28 August via ATO Business Portal or your accountant
- Keep records for 5 years minimum
Frequently Asked Questions
What is a TPAR in construction?
A Taxable Payments Annual Report (TPAR) is an annual report lodged with the ATO by 28 August. It lists all payments your building or construction business made to contractors during the financial year. The ATO uses it to check that contractors are reporting their income correctly.
Do I need to lodge a TPAR as a builder?
Yes, if 50% or more of your business income or activity relates to building and construction services. This includes most builders, renovation companies, civil contractors, and specialist trade businesses that pay subcontractors.
What is the penalty for not lodging a TPAR?
Penalties start at $330 per 28-day period for small entities (under $1M turnover), up to a maximum of $1,650. Medium entities face up to $3,300 and large entities up to $8,250. The ATO has issued over $18 million in TPAR penalties in recent enforcement rounds.
Do I report employee payments in my TPAR?
No. Employee payments are reported through Single Touch Payroll (STP), not TPAR. TPAR only covers payments to contractors. Reporting employees in your TPAR is one of the most common mistakes.
What is the difference between wet hire and dry hire for TPAR?
Wet hire (equipment plus operator) is a building and construction service and must be reported in your TPAR. Dry hire (equipment only, no operator) is not a building and construction service and should be excluded.
How does Payday Super affect TPAR?
From 1 July 2026, Payday Super requires super to be paid per pay run instead of quarterly. This sharpens the contractor vs employee distinction: true contractors are reported annually via TPAR, while deemed employees must be processed through STP and Payday Super every payday.
Written by Essa Azimi, Founder of SkillsDock. This guide is updated annually ahead of each TPAR lodgement deadline. For personalised tax advice, consult your registered BAS or tax agent.
Related reading:
- Building and Construction Award 2026: Pay Rates Explained Simply
- ABN vs Employee in Construction: How to Tell the Difference
- How to Invoice as a Subcontractor in Australia
Internal links: SkillsClock — GPS Time Tracking | For Subcontractors | For Builders | FAQ