Payment Times Reporting Scheme
Australia's 3.5 million small businesses support our national economy, employing almost half of the Australian workforce. Late or long payment times can cause significant problems to their cash flow, impacting their businesses.
To address this, the Australian Government has introduced the Payment Times Reporting Scheme. The scheme aims to help payment outcomes for small businesses. It will create transparency around the payment practices of large businesses to small businesses.
About the scheme
The Payment Times Reporting Scheme commences 1 January 2021. It falls under the Payment Times Reporting Act 2020.
The scheme requires large businesses and large government enterprises to report on the payment terms and times for their small business suppliers.
The scheme will:
- increase transparency around large business' payment performance
- help small businesses decide who to do business with
- create incentives for large businesses to improve their payment times and practices
- help the general public make decisions about the large businesses they buy from
There is a 12 month transition period before compliance and enforcement measures apply. The transition period ends in January 2022.
Consultation with Australian businesses and stakeholders helped shape the scheme.
Large businesses and enterprises reporting requirements
The scheme applies to:
- large businesses and certain government enterprises with a total annual income of over $100 million
- controlling corporations where the combined total annual income for all members is more than $100 million
- if the entity is a member of a controlling corporation's group where the total income of the group is $100 million and the total income for the entity for the most recent income year was at least $10 million
Businesses that fit into one of these categories are required to report on their payment terms and practices for their small businesses. They will submit a Payment Times Report to the Payment Times Reporting Regulator twice per year.
The majority of large businesses will need to submit their first report between July and September 2021.
The government has established the Payment Times Reporting Regulator. The Regulator will monitor and enforce reporting under the Payment Times Reporting Act 2020.
The Regulator will:
- administer the scheme
- publish Payment Times Report on the online Payment Times Register
- raise awareness and assist large businesses in their compliance with reporting
Payment Times Register
Biannual reports will be published on a central public register, the Payment Times Register. This public register shows how reporting entities are paying their small business suppliers.
The first reports will appear on the register after the first reporting period in July 2021.
Small Business Identification Tool
For the purposes of the scheme, small business refers to an entity with a turnover of less than $10 million in the most recent income year.
The new Small Business Identification Tool will identify small business suppliers using this definition.
The tool will allow large businesses to upload their suppliers ABNs to receive real-time, accurate identification of small businesses. The tool will be available from December 2020.
The Payment Times Reporting Scheme Guidelines will be available in November 2020. The guidelines will detail the scheme requirements for large and small business. Large businesses will be able to access the reporting portal in order to self-register in November.
For more information, visit industry.gov.au/PTRS