The scheme, which passed Parliament earlier this month, will require large businesses with an income threshold of over $100 million per year to submit a biannual report on their small-business payment terms and practices.
The new measure will start on 1 January 2021, with the Department of Industry, Science, Energy and Resources now shedding light on how it will administer and regulate the scheme.
According to the department, large businesses will need to detail the shortest and longest standard payment periods offered to small businesses, among other payment terms and practices, through a portal.
A small-business identification tool will be made available in December to help large businesses determine their small-business suppliers, with the full reporting system to be available by April 2021.
The Payment Times Reports Register, a publicly available register which shows how reporting entities are paying their small-business suppliers, will go live from July 2021.
The department also notes that it will engage with large businesses and educate them about how to comply, with a 12-month transition period before compliance and enforcement measures apply.
Failure to report for large entities could result in daily penalties of 60 penalty units ($13,320) for an individual and 300 penalty units ($66,600) for a body corporate per day.
The government believes the scheme will allow small businesses to make more informed decisions about who to do business with, and create pressure on large businesses to speed up their payment terms.
The scheme applies to large businesses and certain government enterprises with a total annual income of over $100 million; controlling corporations where the combined total annual income for all members is more than $100 million; and businesses with a total annual income of at least $10 million that are part of a group headed by a controlling corporation with a collective income greater than $100 million.
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.