Using Xero’s Taxable Annual Payments Report
Australian businesses within the Building and Construction industry have additional tax reporting requirements. These businesses need to report on total payments made to each contractor for building and construction services, and submit the annual report on 21 July.
To generate the Taxable Annual Payment Report (TAPR), follow these steps:
Access the TAPR in Xero.
Access the TAPR from the menu bar by clicking on Reports→All Reports→Taxable Annual Payment Report. The Taxable Annual Payment Report dashboard opens. Note: You can’t favourite or add the Taxable Annual Payment Report to the Reports drop-down menu.
Run the report wizard.
Run the Taxable Annual Payment Report wizard by clicking the button labelled Set Up Rules. The Taxable Payment Rules window opens, and it’s here where you create rule(s) to capture contractors and payments to report in the TAPR.
To make this process easier, create a Contact Group of all contractors who need to be reflected in the report. Also allocate all relevant contractor labour payments to a single general ledger account code like Contractor Expenses, for example.
Selecting the Contact Group.
In the Taxable Payments Rules window at the Payments To drop-down field, select the relevant contractors contact group, and in the Paid From drop-down field, select the relevant contractors labour expense account.
To add additional Taxable Payment Rules, click the button labelled Add Rule. (Note: Up to 12 Taxable Payment Rules can be added.) To delete a Taxable Payment Rule, click the cross to the right of the rule.
Save the Taxable Payment Rules.
Click the green button labelled Save. Data meeting the criteria set by the Taxable Payment Rules appears on the next window. To further refine the rules, if you realise you’ve not captured all the required data, click the button Edit Report Rules and work through the two preceding steps.
A validation check highlights issues in the Comments column of the report. Click on the Contact line to drill down to the underlying transactional details. Red boxes highlight incomplete details so go back and fill these out appropriately.
Note: The ABN must be in a valid format accepted by the ATO and the abbreviated state name must be entered. That is: ACT, NT, QLD, SA, TAS, VIC or WA.
If transaction issues are identified, like miscoding, drill down further to add details and then save the transaction. Exclude lines of a transaction that have been captured but don’t need to be reported by unchecking the box in the Include column beside the individual line.
If, for example, you’re not required to report on material expenditure, you can deselect these transactions. Save updated information by clicking the green Save button.
Advise the Tax Office.
It’s necessary to advise the Australian Taxation Office (ATO) of the report information, either by uploading the information to the ATO portal or filling out the ATO paperwork manually.
To export the Taxable Annual Payment Report to the ATO, click the green button labelled Export ATO Format, which creates a file called ‘TPAR_CO’. This downloads to your computer and can be uploaded to the ATO business portal.
To prepare for a paper-based report, export the file as a CSV file by clicking on the green button labelled Export CSV. Order the Taxable Annual Payment Report (NAAT 74109) form from the ATO, and fill in the details from the exported information. Note: The CSV file does not validate the information.
If your own organisation’s details are incomplete, you’ll be prompted to update the information before the TAPR can be generated. You’re required to have a legal business name, a valid ABN, and the state detailed as a three-letter abbreviation.