The new Payment Times Reporting Scheme (PTRS) applies from 1 January 2021 and requires certain entities (including but not limited to) companies to publicly report on their payment terms and practices for their small business suppliers. This is achieved primarily through the imposition of a bi-annual reporting requirement whereby effected entities must provide details of their payment terms for small business. This information is then published on a public register which can then be accessed by any interested party.
Affected entities
Companies that carry on an enterprise have a compliance obligation for the purposes of the PTRS if any of the following apply:
- The total income for the entity for the most recent income year for the entity was more than $100 million.
- If the entity is a controlling corporation—the combined total income for all members of the controlling corporation’s group for the most recent income year for the controlling corporation was more than $100 million.
- If the entity is a member of the group of a controlling corporation to which subparagraph (2) applies—the total income for the entity for the most recent income year for the entity was at least $10 million.
Total income is broadly the amount reported in the ‘Total income’ label of the company’s income tax return.
|
Example
ABC Pty Ltd is a controlling corporation with total income of $110m. ABC has two subsidiaries:
For the purposes of the PTRS:
-
DEF will have a compliance obligation because its turnover exceeds $10m and is part of a group where the combined income of the group exceeds $100m.
-
GHI will not have a compliance obligation because even though the group’s total income exceeds $100m, GHI’s income does not exceed the $10m threshold.
|
A ‘Group’ for the purposes of the PTRS is defined according to the Corporations Act and is summarised as follows:
-
A controlling corporation is a company incorporated in Australia which is not a subsidiary of another body corporate incorporated in Australia.
-
A subsidiary is any corporate where a controlling corporation can control either:
-
The composition of the company board
-
More than half of the votes at a general meeting of the company
-
More than half of the share capital of the company
-
Is a subsidiary of another subsidiary of the controlling corporation.
What needs to be reported
Information required to be included in a report include details of the shortest and longest standard payment periods offered by the reporting entity, as well any changes to these standard periods during the reporting period. The report should also state the proportion of small business invoices paid by the entity between certain ranges of time, including invoices paid within 20 days after the day the small business invoice was issued - This could be between 21 and 30 days, 31 and 60 days, 61 and 90 days, 91 and 120 days and invoices paid more than 120 days.
Small businesses are those which carry on as an enterprise in Australia and have an annual turnover of less than $10m for the current income year. A Small Business Identification tool will be introduced to assist affected entities in identifying small business suppliers they report for.
How to report
An early release of the portal has been made available. Access to the full portal (including report submissions) will be available from April 2021.
To submit a Payment times report to the Regulator, reporting entities will:
- download a Payment times report template from the payment times website
- populate the template with their payment times information
- log into the reporting portal to upload their report and to submit any other relevant information or documentation
Once lodged, the Regulator will publish reports on the Payment times register.
Key dates
| Key implementation dates of the PTRS and the first reporting timeframe |
| 1 January 2021 |
PTRS reporting period begins |
| 1 July - 31 September 2021 |
Businesses submit their first reports |
Transition year and penalties
- Bi-annual reports must be lodged within three months after the end of the relevant reporting period.
- There is a 12 month penalty free transition period to enable familiarisation and transition to the scheme.
- After the transition period, failure to lodge penalties may apply.
- Penalties will also apply if false or misleading reports are lodged.
- In addition, reporting entities may also be directed to undertake independent audits where there is a reasonable suspicion of an entity’s wrongdoing in relation to the reporting requirements.
What to do next
Although the legislation took effect on 1 January 2021, there is a 12 month penalty free transition period with the first reports due post July 2021.
The first step is to consider whether these reporting requirements apply to your company. For more information and transition assistance, contact your Moore Australia advisor.