Acts of Parliament assented to - Act No. 91 and 92 of 2020

Overview

The Payment Times Reporting Act 2020 was enacted by the Parliament of Australia to address the issue of late payment practices among businesses, which had been identified as a significant problem affecting the cash flow and financial stability of small businesses and other entities. This Act was assented to by the Governor-General on 14 October 2020. The policy objective behind this legislation is to promote transparency and accountability in payment practices by requiring certain entities to report their payment terms and practices. This is aimed at fostering a fairer business environment, particularly by ensuring that small businesses are paid promptly, thereby improving their liquidity and supporting economic recovery, especially in the context of the challenges posed by the COVID-19 pandemic.

Scope and Application

The Payment Times Reporting Act 2020 applies to entities that meet specified thresholds in terms of revenue or turnover, aiming to promote transparency and accountability in payment practices within the business sector. It mandates entities with an annual turnover or consolidated revenue of more than $100 million to report on their payment terms and practices. This requirement is intended to provide greater visibility into payment periods and encourage fairer payment practices among businesses. The Act operates on a national level, impacting all entities across Australia that meet the prescribed financial thresholds. Notably, the Act does not extend its reach to individual persons but rather targets entities involved in commercial transactions. Additionally, the application of the Act can be refined through subordinate legislation, allowing for adjustments to the reporting requirements and the financial thresholds that trigger them.

Key Provisions

The Payment Times Reporting Act 2020 (sections 5, 6, 7) mandates that certain entities, typically businesses with an annual turnover exceeding $50 million, must submit reports on their payment terms and practices. These reports are to be made to the Australian Small Business Commissioner and must include details such as the payment terms offered, the average payment period, and any significant changes to these terms. The Act specifies the format and frequency of these reports, requiring them to be submitted annually. These entities have obligations under the Act to ensure that they gather accurate data and present it in a clear and comprehensible manner. They must also maintain records of their payment practices for at least five years, which could be subject to review or audit by the Commissioner. The Act places the responsibility on these entities to ensure compliance with their reporting obligations, and failure to do so could result in penalties. Should an entity fail to comply with the reporting requirements, they may face civil penalties. The Act stipulates that the maximum penalty for an individual officer found guilty of a contravention is $21,000, while the maximum penalty for a corporate entity is $105,000 (section 14). Additionally, entities that provide false or misleading information in their reports may face further penalties, including potential legal action to recover costs associated with the breach. In addition to the civil penalties, the Act may also have implications for criminal liability if the non-compliance is deemed to be fraudulent or involves serious misconduct. This could lead to prosecution, with potential criminal penalties including fines and imprisonment, depending on the severity of the breach. The Act aims to enforce transparency and accountability in payment practices, thereby promoting fair trading practices within the marketplace.