Beyond the numbers with Grant Thornton: Listen now
The Payment Times Reporting (PTR) Scheme came into effect on 1 January 2021 requiring certain entities to report their payment terms to small business suppliers every six months. The information will be made publicly available through the Payments Times Reporting Register that will be maintained by the Regulator (a newly appointed Public Service position).
The aim of the scheme is to improve payment outcomes for small business by creating transparency around the payment practices of large business entities and groups. By having access to this information, small businesses can be more discerning as to who they choose to trade with. The intention is to also create cultural pressure for change to improve payment times overall.
The recommended payment term is 30 days, however, research suggests that more than a third of small business invoices are paid after that 30 day period. Normalising a 30 day payment time from large business to small business is estimated to have a net benefit of $313 million per year to the Australian economy.
The reporting requirement applies to constitutionally covered entities (CCE) that carry on an enterprise in Australia and have a total income which exceeds the following thresholds.
CCE’s could include private/public companies, trusts, partnerships, joint ventures, sole traders, etc. Not for Profits have been exempted, however entities below the threshold can still voluntarily agree to report. The Regulator will have access to ATO information on turnover to determine who should be complying and penalties will apply to those who don’t.
It may be possible that there are multiple entities in a larger corporate group that have the obligation to report. Importantly, the reporting obligations are imposed on each reporting entity – a single group PTR report is not permitted.
In line with the new obligations under PTR, please see the steps to take to adhere with reporting requirements:
Reporting entities must lodge a Payment Times report within 3 months of the end of each 6-month reporting period (2 reports for each income year).
Generally this will require the reports to be lodged by 30 September, but if you have any earlier year end e.g. 31 March, then reports will be due by 30 June.
A PTR Small Business Identification Tool has been introduced to assist reporting entities to identify who is a ‘small business supplier’ and the legislation defines a small business as one described as such by the identification tool. Generally, this will include those entities with an annual turnover of less than $10 million for the most recent income year.
Reporting entities will need to provide details of:
Reporting entities will be given a 12-month penalty free transition from the implementation date of the PTR to enable them to familiarise themselves with the scheme and transition effectively.
Once this period ends, failure for large entities to report could result in daily penalties of 60 penalty points ($13,320) for an individual and 300 penalty units for a body corporate ($66,600) per a day.
No. While there appears to be crossover with the ABCC Security of Payments reporting requirements and the various State legislation that requires (Head) Contractors in the construction industry to report around payment times, PTR is a broader reporting scheme applying to payments all Small Business suppliers, not just subcontractors. As such, you will still need to report to the PTR Regulator if you are an eligible entity and there is unlikely to be any time saved from the existing reporting.
To make your transition hassle-free, we can tailor our support to suit your needs; ranging from:
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