PAYMENT TIMES REPORTING SCHEME
This scheme will only apply to a very small number of clubs on a compulsory basis, essentially those clubs with a turnover of more than $100 million. However, some clubs may choose to become a reporting entity under the scheme. The scheme applies in other circumstances, to other types of corporations which are not relevant to clubs.
The Payment Times Reporting Scheme (PTR Scheme), introduced by the Federal Government, will commence from 1 January 2021. This scheme introduces new reporting requirements for large businesses and certain government entities in relation to information on their payment terms with small business suppliers. The reporting information is publicly available to create incentives for reporting entities to improve their payment terms and practices.
The scheme aims to improve payment outcomes for small businesses. It creates transparency around the payment practices from large businesses to small business suppliers.
Small businesses will have access to information on reporting entities’ payment performance. This enables them to make a more informed decision about their potential customers. Greater transparency on payment practices and performance also encourages cultural change to improve payment times.
The club industry is recognised for the equity and fairness it applies in dealing with its suppliers. Voluntary participation in the scheme may provide a mechanism for the community to grasp the spirit in which most clubs conduct their business and create a greater awareness of the community-minded approach taken by clubs.
Volunteer reporting entities will:
- apply via email to Paymenttimesreporting@industry.gov.au
- continue to be reporting entities until they apply to cease to be a reporting entity
- have the same obligations as other reporting entities
A volunteer reporting entity becomes a reporting entity at the start of its next income year. That is the income year following the income year in which it applies to volunteer.
Long and late payments are a significant problem for Australia’s 3.5 million small businesses. This has negative impacts not only on these businesses but also more broadly across the economy. Small businesses that are paid slowly, in turn pay their suppliers more slowly.
Scope of reporting scheme
An entity is required to report under this scheme when one of the below thresholds is exceeded for the most recently reported income year:
- An entity with total income exceeding $100m, or
- A “controlling corporation” of the corporate group where the combined total income exceeds $100m, or
- An entity with stand-alone total income exceeding $10m and who is a member of the controlling corporation’s corporate group.
Entities which are not captured by the above thresholds may choose to voluntarily register under the PTR scheme.
Small business designation
Small Businesses, the focus of the PTR reporting scheme disclosures, will be identified through a Payment times Small Business Identification Tool (SBIT). This includes businesses with a total annual turnover of less than $10 million for the most recent income year.
For entities with June and December year ends, reporting commences in respect of the 6-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.
The information will be made publicly available and is expected to be subject to media attention when the scheme reporting information becomes available.
The PTR Scheme will be administered by the Department of Industry, Science, Energy and Resource (the Regulator) who will have the power to audit compliance.
The scheme requires entities to disclose information in relation to:
- Standard payment terms
- The proportion of small business invoices paid during the reporting period that were paid in accordance with each of the following time frames:
o Within 20 days of receipt of the invoice
o Between 21 and 30 days of receipt of the invoice
o Between 31 and 60 days of receipt of the invoice
o Between 61 and 90 days of receipt of the invoice
o Between 91 and 120 days of receipt of the invoice
o More than 120 days of receipt of the invoice
- The proportion (determined by total value) of all procurement during the reporting period from small business suppliers
- Supply chain finance arrangements (e.g. reverse factoring or dynamic discounting)
- Name of the responsible member who signed the report and a declaration that it will be provided to the principal governing body (e.g. board).
If a club is required to participate or volunteers to do so, it should have a robust process in place to prepare, report and verify the information required for the PTR Scheme. The scheme includes penalties for non-compliance.
If your club is considering participating in the scheme or is required to do so, please contact us for an obligation free discussion.