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TPAR Xero – Setting up Taxable Payments Annual Report in Xero software

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Published on Thursday, 28 July 2022 10:14

Are you running a business providing services in building and construction, cleaning, courier, road freight, IT or security industries?

This could apply to you. You may be wondering about and how to generate in a Taxable Payments Annual Report (TPAR) in XERO – and when is the due date?

Here we look at what 1 Australian Tax Office (ATO) requires and then 2 Steps to set up and generate the Taxable Payments Annual Report from XERO software.

1 ATO Requirements

You may need to lodge a Taxable payments annual report by 28 August each year if you are a:

• Business in the Building and Construction industry;
• Business in the Courier and Cleaner industries;
• Government entity.

The Taxable Payments Annual Report notifies the ATO about payments you have made to contractors for providing services. Some government entities also need to report the grants they have paid and payments they make to certain other entities.

Contractors can include subcontractors, consultants and independent contractors.

They can be operating as sole traders (individuals), companies, partnerships or trusts.

See our post HERE, for more detail.

2 XERO - The steps to set up and generate the report are -

How to track reportable payments in XERO

XERO lets you identify payments to contractors that you need to include in the report. The report:

• Includes paid bills and spend money transactions (including overpayments and prepayments) from all accounts;
• Excludes credit notes and payments made in other currencies;
• Only includes organisations or contacts with Australian addresses.

You can filter out individual payments after you've run the report. If you've withheld tax because no ABN has been quoted you can either:

• Enter this manually on the paper report; or
• Continue to report it in your Activity Statements.

First you set up a Contact Group, then set up Rules, then Export the Report –

1 Create contact group

Create a contact group for contacts you’re needing to include in the Taxable Payments Annual Report, then add each contact to this group.

You can create more than one contact group if your Taxable Payments Annual Report is likely to produce more than 2500 invoice lines. Make sure your contacts belong to only one of the contact groups you've created.

If you don't create a contact group, the rules you set up to run the report will find all contacts you've paid.

2 Set up or edit rules for contractors and reportable payments

The report identifies contacts you've made taxable payments to, based on the rule.

1. In the Reports menu, select All Reports.
2. Click Taxable Payments Annual Report.
3. Select the year covered by the report.
4. Select either:
• Set up Rules to set up your first set of rules; or
• Edit Report Rules to edit your rules.
5. In Payments to, select either All contacts or an individual contact group you've set up for your Taxable Payments Annual Report contacts.
6. In Paid from select either:
• All accounts (if you've selected an individual contact group in the Payments to dropdown); or
• An individual expense account from your chart of accounts.
7. (Optional) Select Add Rule to add more rules, up to 12 in total. You can delete a rule by selecting x at the end of the Paid from field.
8. (Optional) Select the Reset all previously deselected payments checkbox to reset any excluded payments or contacts.
9. Click Save.

3 Export report

You need to have the submit BAS permission to lodge the TPAR from XERO. You can't lodge the TPAR from a trial organisation.

10. Click Lodge to ATO.
11. Review your organisation’s details and click Continue.
12. If you’re a tax agent, confirm your tax agent details and click Continue.
13. Select whether the TPAR is new or amended. If the TPAR was previously lodged from Xero, the selection will default to amended.
14. Confirm you have authorisation to file, then click Lodge to ATO.

Once you’ve lodged the TPAR, the History and notes section will include a record of the date it was lodged, who lodged it, and its status (Sent to ATO, Lodged successfully with the ATO, or Failed to lodge with the ATO).

You’ll also receive an email confirming the success or failure of the lodgement. If the lodgement failed, the email will outline what details are incorrect or missing. Check the TPAR and try lodging again.

If you can’t lodge the TPAR directly from XERO (eg it contains more than 250 contacts or your organisation is still in trial), click Export ATO Format to use the ATO’s online Business Portal, or Export CSV to help complete the ATO’s paper-based Taxable Payments Annual Report.

More help from XERO.

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 0407 361 596 Australia

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