Under the new Payment Times Reporting Scheme which commences on 1 January 2021, approximately 9000 large business in Australia will now be required to publicly report their payment terms and practices in respect of their small business suppliers.
The first reporting period under this new scheme will be from 1 July to 31 December 2021. The payment times report for this period must be given to the Regulator by 30 March 2022. Reporting entities will need to report on a bi-annual basis, with the second reporting period from 1 January 2022 to 30 June 2022.
The primary objective of the Payment Times Reporting Scheme  is to provide increased transparency on the time it takes large business to make payments to their small business suppliers and thereby improve the speed of the payment processes overall.
Late payments are a significant source of financial pain for Australian small and medium businesses (SMBs), with an estimated $115 billion in payments from large businesses to SMBs paid late each year.
When SMBs are paid late, it pressures them financially and impacts investment and employment and constrains overall economic potential. Small businesses generate a third of private-sector gross domestic product and employ nearly half of all workers.
Approximately 9000 large business and government agencies are expected to be subject to the Scheme. A Reporting Entity will be within the reporting threshold if it carries on business in Australia and is either a:
A small business is expected to be any entity that carries on an enterprise in Australia with an annual turnover less than A$10m for the most recent income year.
Basic information regarding the Reporting Entity must be provided with the key payment information being:
The first reporting period is from 1 July 2021 to 31 December 2021.
The payment times report for this period must be given to the Regulator by 30 March 2022. Reporting entities will need to report on a bi-annual basis, with the second reporting period from 1 January 2022 to 30 June 2022.
The Regulator will establish and access be available from December 2020 to the full reporting portal. Submitted information will subsequently be made available on a public Payment Times Reporting Register also managed by the Regulator.
Potential financial penalties are significant and include:
|Nature of contravention||Maximum penalties|
|Failure to report||300 penalty units* (which can be applied per day of non-compliance)|
|False or misleading reports||0.6 per cent of the total income year in which the contravention occurred|
|Failure to keep records||0.2 per cent of the total income for the income year in which the contravention occurred|
|Failure to comply with audit notice||200 penalty units (which can be applied per day of non-compliance)|
|Failure to reasonably assist the auditor||0.2 per cent of the total income for the income year in which the contravention occurred|
Source: Payment Times Reporting Bill 2020. *On or after 1 July 2020 1 penalty unit equals $222
More information about this will be available in the Guidance Material, scheduled for publication by the Regulator before 1 January 2021.
Large businesses should begin to engage stakeholders and SMB suppliers to consider the requirements of the Scheme.
Follow the Additional Guidance to be issued by the Regulator.
 Payment Times Reporting Act 2020 and Payment Times Reporting (Consequential Amendments) Act 2020
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