Set up and run your Taxable Payments Annual Report

Building and construction businesses that pay contractors for building and construction services must lodge a Taxable Payments Annual Report with the ATO. Use this page to learn how to set up and run your Taxable Payments Annual Report in Xero.

Your user role determines if you can set up and run a Taxable Payments Annual Report.

Reports and budget role comparison

About the Taxable Payments Annual Report

Complete the ATO Taxable Payments Annual Report (ATO website) using information from the Taxable Payments Annual Report you've run 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.

Create contact group(s) before you start

Create a contact group for contacts you pay who need to be included in the Taxable Payments Annual Report, then add each contact to the group.

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.

Set up or edit rules to find recipients of taxable payments

Set up or edit rules to find contacts you've made taxable payments to:

  1. Under Reports, select All Reports.
  2. Click Taxable Payments Annual Report.
  3. Select the year covered by the report.
  4. Select either the:
    • Set up rules link (or the Set up Rules button) to set up your first set of rules, or
    • Edit Report Rules button, to edit your rules.
  5. Use the drop-down boxes to set up or edit your rules.

    In Paid from select either:

    • All accounts (if you've selected an individual contact group in the Payments to field), or
    • An individual expense account from your chart of accounts.

    In Payments to select either:

    • All contacts, or
    • An individual contact group you've set up for your Taxable Payments Annual Report contacts.

    Select options from the drop-down menus to apply taxable payments rules.

  6. Select the Add Rule button 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.

    Select the Add rule button to add another rule.

    Select a contact group from the Payments to drop-down menu first, if you'd like to select All accounts from the Paid from drop-down menu.
  7. Tick the Reset all previously deselected payments checkbox to reset any excluded payments or contacts.
  8. Click Save.

Confirm recipients' tax details are correct

  1. Select the contact's name.

    Your contact will show as having invalid details if their details are invalid or missing.

    Xero displays an error message listing the invalid details you need to correct.

    Select contact's name to correc invalid details.

  2. Complete or correct the contact's details.

    Xero saves any information you add or update back to the contact's record.

  3. Review the payments that Xero will include in the report. Use the Include column to uncheck:

    • Individual boxes, if you want to exclude a payment
    • All boxes, if you want to exclude the contact.

    Uncheck to exclude payments from the report.

    Edit your rule to reset any excluded payments or contacts.
  4. Click Save.

Export the report in the ATO format or as a CSV file

ATO format

You can submit your report to the ATO through their online services Business Portal.

  1. Check your contact details and organisation settings are complete. This includes your legal (trading) name, Australian Business Number, phone number, and a physical address in Australia.

  2. Click Export ATO Format.

    Select the Export ATO Format to export data in the format required by the ATO.

  3. Log in to the ATO Business Portal (ATO website) and import your Taxable Payments Annual Report.

Export as a CSV file

Click Export CSV to generate a report for your own review. For example, you may wish to use this to help you complete the ATO's paper-based Taxable Payments Annual Report (ATO website).

You can't submit the CSV file to the ATO.

Troubleshooting

If your Taxable Payments Annual Report has too many line items (for contacts or transactions), you may receive an error message. This is because the report is too large. If this happens, follow these steps:

  1. Re-run your report in stages and combine the data from all the reports you produce.
  2. Complete a paper copy of the Taxable Payments Annual Report to send to the ATO.

You can also try the following:

  • Use more specific contact groups - Create more contact groups and move contacts into them. For example, you could create a contact group for demolition contractors, another for maintenance contractors, and so on. Run and export the report for each contact group.
  • Use more specific accounts - Reduce the rules in your report by selecting more specific accounts. For example, you could add a set of rules by selecting individual accounts, in the Paid from field instead of 'All accounts'. Run and export the report for each set of rules.

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