ATO Increasing Scrutiny on Contractor Income
Liz Gibbs • March 7, 2026

Data matching is making it easier for the ATO to detect undeclared contractor payments.

If you work as a contractor, the ATO may already know how much you’ve been paid — even before you lodge your tax return. The ATO is increasingly using data matching technology to identify contractors who may be incorrectly reporting or omitting income.


Under the Taxable Payments Reporting System (TPRS), many businesses are required to lodge a Taxable Payments Annual Report (TPAR) each year. This report details payments they have made to contractors.


These reporting rules apply to businesses that pay contractors in industries such as:

  • Building and construction
  • Courier services
  • Cleaning services
  • Information technology
  • Road freight
  • Security, investigation or surveillance services


Because these payments are reported directly to the ATO, it has a clear record of contractor income in many cases. This means if a contractor fails to report that income in their tax return, the discrepancy may be quickly identified through ATO data matching.


If the ATO believes income has been omitted, they may contact the contractor requesting that the tax return be amended. If the issue is not addressed, the ATO may proceed with a review or audit, and penalties and interest can apply.


The key point is simple: all contractor income must be declared, even if payments were irregular or from multiple businesses.


For contractors, accurate reporting isn’t just about compliance — it helps avoid unnecessary stress, reviews, and penalties. If you’re unsure whether all contractor income has been correctly reported, it’s worth reviewing your records before lodging your return. A quick check now can save significant issues later.


If you would like a little help, please get in touch with us for assistance.


Need Help with your Business, Bookkeeping, Tax or SMSF requirements?

If you would like a little help, please get in touch with us for assistance. We can help with your business, bookkeeping, tax and SMSF requirements. To book an appointment, use our online booking system, give us a call on 07 3289 1700, or email us at reception@rgaaccounting.com.au.We look forward to assisting you this tax season!


Please also note that many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances. Should you have any further questions, please get in touch with us for assistance with your SMSF, business, bookkeeping and tax requirements. All rights reserved. Brought to you by RGA Business and Tax Accountants. Liability Limited by a scheme approved under Professional Standards Legislation. 



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