November 10, 2020
Australian Government introduces new Payment Times Reporting Scheme
The Australian Federal Government has introduced a new mandatory reporting requirement for large businesses and certain Commonwealth government entities to disclose their payment terms and practices with small business suppliers.
The Payment Times Reporting Scheme (PTR Scheme) will commence from 1 January 2021.
Who is required to report?
An entity is required to report if it is carrying on an enterprise in Australia, is not a registered charity, and for the most recently completed income year the entity is one of the following:
An entity may also voluntarily elect to register and report under the PTR Scheme.
If an entity is required to report it must disclose its payment times and practices to small businesses which will be recorded on the Payment Times Register which is a public website.
A small business will be identified through a Payment Times Small Business Identification Tool (SBIT) and includes businesses with a total annual turnover (revenue) of less than $10 million for the most recent income year. The SBIT is expected to be available mid-December.
When is a business required to report?
Reporting entities will be required to report biannually and within three months of the end of each reporting period.
For entities with June and December year ends, reporting commences in respect of the six-month period starting 1 January 2021 with the first report to be submitted by 30 September 2021. Reporting periods vary for entities with any other substituted accounting period.
What must be reported?
The PTR Scheme will be administered by a Senior Executive Service personnel in the Department of Industry, Science, Energy and Resource (the Regulator).
The PTR Scheme rules are expected to be finalized shortly. Under the current law and draft rules, reporting entities are required to report information in relation to their small business suppliers:
If a reporting entity does not comply with the reporting requirements under the PTR Scheme, the reporting entity may be penalized.
Significant penalties may be applied in the following situations:
Maximum penalties can include 0.6% of total income of the reporting entity for the year in which the contravention occurred.
Key impacts for business
1 Currency references in this Alert are to the AU$.
For additional information with respect to this Alert, please contact the following:
Ernst & Young (Australia), Melbourne
Ernst & Young (Australia), Sydney
Ernst & Young LLP (United States), Australian Tax Desk, New York
Ernst & Young LLP (United Kingdom), Australian Tax Desk, London
PDF version of this Tax Alert