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Re: TPAR - Payment to Non Resident Overseas Contractors (IT Services)

Newbie

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Replies 10

I am into IT Services currently providing services to client(s) overseas. As part of this sole trader business, I have also engaged overseas contractor to assist me in completing some of the assignments. So far, in the tax return, I have been showing the total overseas payments that I receive from my client(s) in a financial year as my 'total income' and the total payments which I transfer overseas to the non-australian & non-resident contractor as 'payment to sub-contractor'.

As I understand that from the next year I need to fill Taxable payments annual report (TPAR). Since, I make overseas payments to the contractor who is not australian resident for the tax purpose, what I have to do in TPAR?. Do I need to file a TPAR report in the situation when contrator has no ABN, no Australian link and is outside the jurisdiction of ATO?.

Please help with this.

1 ACCEPTED SOLUTION

Accepted Solutions

Most helpful response

ATO Certified Response

Former Community Support

Replies 9

Hi @Atul,

 

Thanks for your question!

 

First of all, if your contractor is not carrying on an enterprise in Australia and is not entitled to an ABN, they should provide you with a written record of this fact, such as with a Statement by Supplier not quoting an ABN. If they do not provide you with suitable evidence as to why they have not provided you with ah ABN, then you may need to withhold tax from those payments.

 

Keeping these records will help you in the long term as compliance rules change, so it's best to get this organised as soon as possible if you haven't already.

 

If you review our page on payments and details you need to report for Taxable Payments reporting, you will see that payments to overseas workers or contractors are only not required to be reported if PAYG Withholding obligations apply.

 

If you are not required to withhold tax from the payments made to the overseas contractor, then those obligations do not apply and you should report the payments on the TPAR.

 

I hope this is helpful, but please let me know if you have any other questions.

 

Thanks,

 

Rachael B.

10 REPLIES 10

Most helpful response

ATO Certified Response

Former Community Support

Replies 9

Hi @Atul,

 

Thanks for your question!

 

First of all, if your contractor is not carrying on an enterprise in Australia and is not entitled to an ABN, they should provide you with a written record of this fact, such as with a Statement by Supplier not quoting an ABN. If they do not provide you with suitable evidence as to why they have not provided you with ah ABN, then you may need to withhold tax from those payments.

 

Keeping these records will help you in the long term as compliance rules change, so it's best to get this organised as soon as possible if you haven't already.

 

If you review our page on payments and details you need to report for Taxable Payments reporting, you will see that payments to overseas workers or contractors are only not required to be reported if PAYG Withholding obligations apply.

 

If you are not required to withhold tax from the payments made to the overseas contractor, then those obligations do not apply and you should report the payments on the TPAR.

 

I hope this is helpful, but please let me know if you have any other questions.

 

Thanks,

 

Rachael B.

Newbie

Replies 2

Thank you Rachael for your reply. It really helped me in clearing some of my doubts.

 

I didnt know about 'Statement by a Supplier' form. I will get it filled by my overseas contractor. However, looking at the form, seems like its expecting an Australian address while my contractor is an Indian without any Australian address. Thinking of getting it filled somehow by writing outside the text boxes. Form has space for 4 digits postcode whereas India has standard 6 digits postcode. Even space for State is not sufficient.

 

Also, just looked at the sample hard copy of TPAR form, it’s also expecting an Australian address. May be online form has capability to handle overseas payee address. Will wait until July to check it online. 

 

Thank you again for your help and sorry for my late reply. I never got alert in my mail box.

 

Many Thanks

Atul

Newbie

Replies 1

Thanks, where do I put the "Statement by Supplier not quoting an ABN" document?

 

When adding the supplier, I'll just put zero in the tax withheld number?

 

 

ATO Community Support

Replies 0

Hi @niknah

 

We use TPAR reporting to identify contractors who have not met their tax obligation. So where you have an overseas non-resident contractor then you are keeping the "Statement of Supplier" once received on file  as your confirmation of the circumstance. The payer must keep this document with other records relating to the supply for five years.

 

For more information see Taxable payments annual report. You will find a series of headings under this that may be helpful.

 

Thanks

MarkATO

 

Initiate

Replies 4

Hello Rachael

 

After reading the thread below

I believe I still need to include the o/seas contractor in a Taxbale Payments Report

My software program will not generat a TPAR without an ABN or an Aust address for each Contractor

How doi I work around this

 

Thanks

 

Peter H

ATO Community Support

Replies 3

Hi @BalancedBooks

 

You can lodge a separate form for those contractors your software doesn't allow. Just provide the information you know about them. Also ensure you don't mark the form as an amendment so we know its an original and additional to what you have already submitted. See our website for TPAR lodgment options

 

Thanks, Ari

 

Newbie

Replies 2

So can we be clear here. 

 

If our software (Xero) has any Australian supplier of IT services then we fill in all their details in Xero and submit the form electronically. 

Then, for those suppliers who do not give us an ABN number because they are not Australian companies, we submit another form from the business portal?

 

Is this relevant where the external supplier is not simply providing time and materials for a person but is instead providing a blended service from a team of people? 

ATO Community Support

Replies 1

Hi @Rachertac

 

If your software prevents you from including all contractors then yes you can submit additional forms just ensure you use an appropriate TPAR lodgment method.

 

Its important to note that foreign residents who have performed work in Australia, the payments made to them are generally subject to PAYG foreign resident withholding but if the payments are not subject to PAYG withholding, then you need to report them in the TPAR - see payments and details you need to report

 

Ari

Newbie

Replies 0

Thansk Ari, 

 

I can see it is important to identify if a foreign resident (individual) is working in Australia then they should pay PAYG but clarity should also be given on those situations where PAYG is not appropriate. e.g. The phrase Contractor should be defined clearly e.g.

- Is it a supplier of software services who provide a deliverable and all the work is done on foreign soil?

- Is it the supply of an individual's time on Time and Materials where all work is on foreign soil.

- I can see that it should be an individual who lives in Australia and provides services via an American company like Upwork should ensure that their PAYG obligations are met.

 

As a bit of a gripe on the business form process from the portal. It requires a lot of information compared to using our software and given I have 0 companies that I believe would require payg that has not been paid the foreign declaration detailed process is onerous for a nil return.