Changes to the Payment Times Reporting Scheme - are you ready?

The Australian Government has recently introduced significant reforms to the Payment Times Reporting Scheme (PTRS), effective 1 July 2024. The reforms aim to simplify reporting, reduce regulatory burdens, enhance transparency and improve payment practices between large businesses and their small business suppliers.

What are the key changes?

  1. Consolidated revenue: The requirement to report if over the $100 million revenue threshold is now based on consolidated accounting revenue rather than consolidated taxable income.
  2. Consolidated reporting: Large business groups will now be required to submit one payment times report for each consolidated group. The subsidiary’s income is now reported in a single report by the consolidated head entity rather than an entity-by-entity approach. This change aims to simplify the reporting process and provide a clearer picture of payment practices across entire business groups.
  3. Streamlined reporting requirements: The reforms have introduced streamlined reporting requirements, reducing the number of required reporting fields and improving the consistency of payment times data.
  4. New reporting deadlines: For reporting periods starting between 1 July 2024 and 30 September 2024, reports are not due until 30 June 2025. This automatic extension is designed to give businesses ample time to adapt to the new reporting framework.
  5. Enhanced regulator powers: The Regulator now has increased powers to undertake research, create tools to assist users, and identify best and worst payers. This includes the ability to publicly highlight businesses with poor payment practices.
  6. Incentives for timely payments: The reforms introduce incentives for businesses that pay their small business suppliers promptly. Fast payers will be publicly recognised, while slow payers may be required to disclose their payment practices on their websites and financial statements.

How will it affect you?

These changes are expected to have several implications for large businesses:

  • Operational adjustments: Businesses may need to adjust their internal processes to meet the streamlined reporting requirements and ensure accurate and timely submission of reports. Whereas multiple entities may have had to report previously, only the consolidated head entity is to report under the new rules. The consolidated head entity may need to gather this information directly from the subsidiaries and amalgamate it with other entity information to have accurate reporting.
  • Reporting adjustments: The payment times report has changed. A full review will be required to ensure that the updated fields are reported correctly. Alternate reports are available for those entities that have no small business suppliers or are under liquidation.
  • Increased transparency: The requirement for consolidated reporting will increase transparency around payment practices, potentially affecting the reputation of businesses that do not adhere to best practices.
  • Regulatory compliance: Large businesses will need to ensure they comply with the new reporting requirements and deadlines to avoid penalties.
  • Reputational impact: With the Regulator’s enhanced powers to publicly identify poor payers, businesses that fail to improve their payment practices may face reputational damage, which could impact their relationships with suppliers and customers.

Have you missed registering for PTRS under either the old or new systems?

We recommend that you review your revenue for your full consolidated group since 1 January 2021. If you have more than $100 million consolidated revenue at any time from this date, we can help you determine if you should be reporting and from what date. You are required to register the first time your previous financial year’s consolidated income is greater than $100 million.

Transition impact if reports have not been lodged

Reports before 1 July 2024 are still required to be lodged using the old rules and report template. The new rules and reports will then come into effect on 1 July 2024. If there are any outstanding reports from prior periods, this can result in entities having to have different PTRS reporting calculations. It may also mean that there are different reporting entities before and after 1 July 2024.

If this applies to you, we can help you determine the next steps to limit any late lodgement penalties and negative impacts.

Take action with this step-by-step checklist:
  • Assess your consolidated accounting revenue to determine if it exceeds the $100 million threshold.
  • Develop a process for consolidated reporting at the group level.
  • Gather necessary financial data from all subsidiaries to compile a single report.
  • Modify internal systems to align with streamlined reporting requirements, if required.
  • Ensure your reporting software captures any new required fields accurately.
  • Train finance and compliance teams on the new reporting requirements.
  • Provide guidance on the use of updated reporting templates and tools.
  • Adjust your reporting schedule to meet the new deadlines, with the first report due by 30 June 2025 for the period starting 1 July 2024.
  • Plan for timely submission to avoid penalties.
  • Evaluate the potential reputational impact of the new transparency requirements.
  • Implement strategies to maintain a positive reputation by adhering to best payment practices.
 

Stay ahead of regulatory changes

The reforms to the Payment Times Reporting Scheme represent a significant shift in how large businesses report their payment practices. By promoting transparency and incentivising timely payments, these changes aim to create a fairer business environment for small suppliers. Large businesses should take proactive steps to understand and comply with the new requirements to avoid potential penalties and protect their reputation.

Implementing new legislation can take time and effort. Contact our team for help staying compliant.