When a business operates primarily in building and construction services
If you are running a business primarily in the building and construction industry, you must lodge a Taxable payments annual report (TPAR) if you:
- make payments to contractors or subcontractors for building and construction services
- have an Australian business number (ABN).
Payments made to employees are not reported in your TPAR.
Each year, you must:
- review if you need to lodge a TPAR
- report these payments to us on your TPAR by 28 August.
You are considered to be a business that primarily operates in building and construction services if any apply:
- in the current financial year, 50% or more of your business income is earned from providing building and construction services
- in the current financial year, 50% or more of your business activity relates to building and construction services
- in the financial year immediately before the current financial year, 50% or more of your business income was earned from providing building and construction services.
See the steps on how to Work out if you need to lodge
To determine if an entity is in the building and construction industry, see Subregulation 64(6): Taxation Administration Amendment Regulation 2012 (No.1)
Example: business primarily in the building and construction industry
FS Builders earns all of its income from building commercial properties for its clients.
FS Builders is primarily in the building and construction industry. This is because 50% or more of its income is from providing building and construction services.
FS Builders must report the total payments it makes to contractors for providing building and construction services in a TPAR.
End of example
Example: business primarily in building and construction services
ABC is a property developer. It has purchased a block of land in the Melbourne. It intends to build apartments on the block of land.
ABC has created a separate entity called Upmarket Apartments. This entity manages the project and construction of the apartments.
Upmarket Apartments must report payments to contractors for providing building and construction services.
It must report because 50% or more of its business activity relates to building and construction services in a TPAR.
End of example
Example: not all income is from building and construction services
Sascha’s Cabinet Makers is a business that makes and installs custom-made kitchen cabinets.
Cabinet making is a building and construction service activity.
Sascha’s Cabinet Makers also produces and sells ornamental wooden carvings.
Sascha's Cabinet Makers earned the following income from its business activities:
- 45% from cabinet making and 55% from carvings: for 2018–19 income year
- 60% from cabinet making and 40% from carvings: for 2019–20 income year
- 40% from cabinet making and 60% from carvings: for 2020–21 income year.
Sascha's Cabinet Makers must report the payments made to contractors in the 2020 income year in a TPAR. This is because it earned 50% or more of its income from building and construction services in that year.
Although it will not earn 50% or more of its income from building and construction services in the 2021 income year, it still must report payments to contractors in the 2021 TPAR. This is because the financial year immediately before was above 50%.
End of example
Example: mining infrastructure
Black Coal establishes a new mining facility that requires the construction of a range of infrastructure.
Black Coal contracts Earl’s Earthworks to carry out the work. Earl’s Earthworks subcontracts the work.
Black Coal doesn't need to report its payments to Earl’s Earthworks. This is because all of its income is from coal mining.
Earl’s Earthworks must report payments it makes to subcontractors in a TPAR. This is because it carries on a business primarily in building and construction services.
End of example
Example: retail business providing minor building and construction services
Harry’s Hardware is a business that sells building equipment to builders and homeowners.
For an additional fee, Harry’s Hardware can arrange the installation of certain products, such as a skylight.
Harry's Hardware doesn't report payments to contractors who perform the installation. This is because the business is primarily in retail services and not in building and construction services.
End of example
Example: separate entity for building and construction services
Harry’s Hardware sets up a separate business entity called Harry’s Installation Services. This entity installs the products sold by Harry's Hardware.
Harry’s Hardware doesn't report payments made to contractors in a TPAR. This is because it is not carrying on a business primarily in building and construction services.
However, Harry’s Installation Services must report payments it makes to contractors for services in a TPAR. This is because all the income for Harry’s Installation Services is from providing building and construction services (installation of products).
End of example
Example: reporting payments to a subcontractor
Robin's Installation Services (principal contractor) contracts Simone (subcontractor) to install products.
Simone can't complete all the work, so she subcontracts some of the work to Bill (subcontractor).
Robin's Installation Services must report the payments it makes to Simone in a TPAR.
If Simone is carrying on a business that is primarily building and construction services, she must report payments she makes to Bill in a TPAR.
End of exampleWhat are building and construction services
Only report payments you make to contractors for building and construction services.
Contractors can be sole traders, companies, partnerships or trusts.
The definition of building and construction services is broad. It can include any of the activities listed below if they are performed on, or in relation to, any part of a building, structure, works, surface or sub-surface:
- alteration
- assembly
- construction
- demolition
- design
- destruction
- dismantling
- erection
- excavation
- finishing
- improvement
- installation
- maintenance, excluding the maintenance, service or repairs of equipment and tools
- management of building and construction services
- modification
- organisation of building and construction services
- removal
- repair, excluding the service or repairs of equipment and tools
- site preparation.
Examples of building and construction services
The following occupations and work activities satisfy the definition of building and construction services:
- architectural work, including drafting and design
- asphalt and bitumen work
- assembly, installation or erection of prefabricated houses
- block laying
- bricklaying
- building of room components, (for example, kitchens, bathroom components, laundry components, cupboards and similar components)
- cabinet making, including joinery and off-site fabrication for installation at a building site
- cable laying
- communications construction
- concreting, including formwork, pouring and finishing
- construction and sealing roads
- construction management
- decorating
- demolition
- distribution line construction
- drainage work
- dredging
- earthworks
- electrical machinery, heavy, installation (on-site assembly)
- electrical work, including electrical inspection
- electrical construction
- elevator and escalator installation and work
- engineering
- equipment rental with operator, (if there is no operator, it is rental of a good and not a building and construction activity
- erection of frames
- erection of scaffolding
- excavation and grading
- fencing
- finishing
- flood control system construction
- flooring, (for example, tiling, laying carpet, laying linoleum, timber flooring, floating floors, resilient flooring, slate tiles and similar flooring)
- foundation work
- gas plumbing
- glass and glazing work
- hanging or installing doors
- installation of fittings
- installation of hard-wired alarm systems,(for example, security, fire, smoke and similar alarms)
- installation of hot water systems
- installation of prefabricated components, (for example, kitchens, bathroom components, laundry components, cupboards and similar components)
- installation of prefabricated temperature-controlled structures
- installation of septic tanks
- installation of solar devices, (for example, hot water or electricity connections)
- installation of tanks
- installation of window frames
- installation of windows
- installation or work on devices for heating and cooling
- insulation work, (for example, walls, roofs, windows and similar structures)
- internet infrastructure construction
- irrigation system construction
- land clearing
- landscaping construction, including paving and design
- levelling sites
- painting,(for example, internal and external surfaces, including roofs)
- pile driving
- pipeline construction
- plastering or other wall and ceiling construction
- plumbing work, including plumbing inspection
- preparation of site
- project management
- rendering or other internal or external surface finishes
- retaining wall construction
- river work construction
- roofing and guttering
- sewage or stormwater drainage system construction
- stonework
- surveying
- swimming pool installation
- swimming pool construction,(for example, below ground concrete or fibreglass)
- tiling, (for example, walls and similar structures)
- timber work
- wallpapering
- waterproofing interior and exterior surfaces
- weatherboarding.
Examples of buildings, structures, works, surfaces or sub-surfaces
The following is a list of what we consider to be buildings, structures, works, surfaces or sub-surfaces:
- aerodrome runways
- apartments
- breakwaters
- bridges
- canals
- commercial buildings
- communications, internet and electrical infrastructure
- dams
- duplex houses
- electricity power plants
- elevated highway
- flats
- footpath, kerb and guttering
- furnaces
- garages
- golf courses
- harbour works
- high-rise flats
- highways
- housing buildings, including prefabricated housing
- industrial buildings
- jetties
- lakes
- mine sites
- office buildings
- oil refineries
- parking lots
- pipelines
- power plants
- railways
- roads
- semi-detached houses
- sewage storage and treatment plants
- sheds
- sports fields
- streets
- television or radio transmission towers
- tunnels
- water tanks
- waterworks.
Examples: inspections and certifications
Joe's Builders was contracted by a property developer to build a 15-storey building.
Joe's Builders engaged Oz Management, to certify each stage of the building work.
Oz Management followed the project through to the end. It carried out the building inspections and issued the occupancy permit.
Joe's Builders must report the total payments it made to Oz Management for the inspections and certification in a TPAR.
End of example
Example: testing and tagging
LA Plumbing is a business primarily in building and construction services. It engages City Spark to test and tag the electrical equipment and tools used in its business.
City Spark's business is to test electrical appliances to ensure they are safe.
The payments LA Plumbing makes to City Spark for testing and tagging are not reported in a TPAR. This is because the activity is not a building and construction service.
End of example
Example: equipment hire with or without an operator
Total Machinery is an equipment hire store. It offers plant and machinery for hire to businesses providing building and construction services. Equipment for hire includes bobcats, scaffolding and tippers (dry hire).
Total Machinery can also provide the equipment with an operator (wet hire) for an additional fee. Wet hire is a building and construction service.
A builder who hires a bobcat with an operator must report the payment it makes to Total Machinery in a TPAR. This is because the builder is paying for a building and construction service, not just equipment hire.
End of example