The Payment Times Reporting Scheme (PTRS) was introduced by the Australian Government with the aim of improving payment times to small businesses, and has now been in operation for almost 12 months. The scheme places a positive obligation on large businesses and groups to report their payment times and terms with small businesses to the Regulator. This information is made publicly available.

The Government allowed a 12-month grace period for the application of penalties, meaning that entities required to report under the PTRS must lodge their 2021 lodgements by 31 December 2021 in order to avoid punitive penalties.

Which entities are required to report?

The PTRS requires “reporting entities” to report on the payment times and terms of all trade credit arrangements entered into with small business entities. These reporting requirements apply to entities that carry on an enterprise in Australia, and where any of the following applies:

  1. The entity had “total income” for the most recent income year in excess of $100 million;
  2. The entity controls a group that had “combined total income” in excess of $100 million in the most recent financial year; or
  3. The entity is a member of a group mentioned in (2.) with annual turnover for the most recent year of at least $10 million.

Please note that these requirements can apply to companies, trusts, trustees, joint ventures and partnerships, provided the eligibility requirements are met.

What is meant by “total income” or “combined total income”?

Broadly, total income represents to the income recorded in an entity’s financial statements for the most recent income year. For the purposes of the PTRS, total income is calculated in Australian dollars and includes Australian and foreign income, exempt income, other non-assessable income and/or intra-group income.

Under the PTRS, total income is determined on an individual entity basis. Where the entities are grouped, the combined total income of all members must be determined and any intra-group transactions must be taken into account in these calculations.

The following example illustrates the application of the combined total income rules:

ABC Pty Ltd is an Australian head company of a tax consolidated group with a notional total income of $50 million. XYZ Pty Ltd and LMN Pty Ltd are members of ABC’s group, each with a notional total income of $30 million. The combined total income of the group is $110 million. The head company, ABC Pty Ltd, is a reporting entity because the group’s combined total income exceeds $100 million. The member entities are also reporting entities as they each have total income in excess of $10 million.

When are the reporting deadlines?

Payment Times reports are required to be lodged every 6 months of a business’ income year, with the first submission of reports covering the period 1 January 2021 to 30 June 2021. Reports are due for lodgement within 3 months of the end of the 6-month period. Therefore, the first lodgement of the PTRS was due by 30 September 2021.

Penalties for late lodgement of reports begin at approximately $13,320, and scale up quickly for incidences of reckless non-compliance. However, eligible businesses have until 31 December 2021 to attend to this lodgement before non-compliance penalties are imposed by the Regulator.

What is required to be lodged?

Businesses must report on their payment times and terms of their trade credit arrangements with small business suppliers through the Payment Times Reporting Portal. The portal is accessed through a myGovID log in. You will need to ensure you are authorised to act on behalf of the business for interactions with the Department of Industry, Science, Energy and Resources (DISER).

To submit a Payment Times Report, each reporting entity must:

  1. Complete a template with their payment times information (templates and instructions can be found here);
  2. Complete a declaration by an authorised person to approve the report; and
  3. Upload these files and any other relevant information to the portal.

Note that Regulator makes public disclosures of the Payment Times Reporting Register.

Learn more

To learn more about Payment Times Reports or for any assistance regarding determining eligibility or attending to lodgement, please contact Murray Howlett, Tom Howard or your Pilot Advisor on 07 3023 1300.