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Small business Machinery of Government (MoG) changes 2021
This content is under review. The small business function transferred to Treasury as a result of the Administrative Arrangements Order made on 15 April 2021 with effect from 15 April 2021.
 

Term

Description

ABN

An Australian Business Number, a unique identifier used for taxation purposes.

the Act

The Payment Times Reporting Act 2020.

Body corporate

The term body corporate covers any artificial legal entity having a separate legal personality. These entities have perpetual succession. They also have the power to act, hold property, enter into legal contracts and sue and be sued in their own name.

Carrying on an enterprise

Carrying on an enterprise has the meaning given by section 5 of the Act.

Includes doing anything in the course of the commencement or termination of the enterprise. See also Enterprise.

Commonwealth

Commonwealth of Australia.

Constitutionally covered entity (CCE)

Constitutionally covered entity (CCE) has the meaning given by section 6 of the Act.

CCEs are:

  • a constitutional corporation (a trading or financial corporation formed within the limits of the Commonwealth)
  • a foreign entity
  • a corporate Commonwealth entity or a Commonwealth company, within the meaning of the Public Governance, Performance and Accountability Act 2013
  • an entity, other than a body politic, that carries on an enterprise in a territory
  • a body corporate that is incorporated in a territory
  • a body corporate that is taken to be registered in a territory under section 119A of the Corporations Act 2001

Contract

A contract can be written, oral or partly written and partly oral. A contract may be defined as an agreement between two or more parties that is intended to be legally binding.

Controlling corporation

Controlling corporation has the meaning given by section 5 of the Act and is drawn from concepts in the Corporations Act 2001.

Controlling corporation refers to an Australian body corporate that is not a subsidiary of another body corporate that is incorporated in Australia.

Disputed invoice

A disputed invoice is where:

  • a large business raises a formal dispute over the goods or services provided by a small business supplier and the large business withholds or only makes a partial payment, pending resolution of the dispute
  • a small business supplier raises a dispute in relation to a partial or incomplete payment

Enforcement day

Enforcement day has the meaning given by subsection 37(2) of the Act.

The day occurring 12 months after the commencement of the Act (i.e. 1 January 2022) when the civil penalty provisions of the Act begin to apply.

Enterprise

Enterprise has the meaning given by section 5 of the Act.

An enterprise is an activity or series of activities done:

  • in the form of a business
  • in the form of an adventure or concern in the nature of trade
  • on a regular or continuous basis, in the form of a lease, licence or other grant of an interest in property
  • by the trustee of a fund covered by subdivision 30-B of the Income Tax Assessment Act 1997 to which deductive gifts can be made
  • by the trustee or a person who manages a complying superannuation fund (see section 45 of the Superannuation Industry (Supervision) Act 1993)
  • by a charity
  • by the Commonwealth, a state or a territory, or by a body corporate established for a public purpose under a law of the Commonwealth, a state or a territory
  • by a trustee of a fund covered by item 2 of the table in section 30-15 of the Income Tax Assessment Act 1997 or of a fund that would be covered by that item if it had an ABN

Group structure of a controlling corporation

A collection of member entities and the controlling corporation.

Income year

Income year has the meaning given by section 5 of the Act.

The financial year which is used by businesses for tax purposes including where the Commissioner of Taxation allows an entity to adopt an accounting period ending on a day other than 30 June.

Where income tax is not payable by the reporting entity, they may use a standard financial year as their income year.

Issue day

The date an invoice is received by an entity in accordance with the invoicing requirements of the relevant contract, regardless of any other date entered into a software system for the entity.

Invoice date

The date which is marked on an invoice as the ‘invoice date’.

Invoice paid

An invoice is paid when money has been debited from the procuring business’s applicable account. For cash and cheque payments, it is paid on the day the cash or cheque is given to the supplier.

Member

Member has the meaning given by section 5 of the Act.

A subsidiary of a controlling corporation is a member of the controlling corporation’s group (unless it is also a subsidiary of another body corporate because the body corporate meets the requirement in subparagraph 46(a)(i) or (ii) of the Corporations Act 2001 in relation to the subsidiary; and the other body corporate is not a member of the group).

the Minister

The Minister responsible for the Act.

Payment times register

A publicly available register of published Payment times reports.

Payment times report

Payment times report has the meaning given by section 5 of the Act.

A report which must be given to the Regulator in accordance with the Act.

Payment times Small Business Identification tool

Payment times Small Business Identification (SBI) tool means the tool by that name made available by the Department in any form the Regulator considers appropriate, as existing from time to time.

It is a tool developed for large businesses to identify their small business suppliers for the purposes of preparing a Payment times report.

Principal governing body

Principal governing body has the meaning given by section 5 of the Act.

The body, or group of members of the entity which are primarily responsible for the governance of the entity, such as the board of a company.

Recent income year

The most recent income year for an entity will be its previous income year and, if relevant, the previous year of its controlling corporation’s group.

the Regulator

The Regulator has the meaning given by subsection 24(3) of the Act.  

The Payment Times Reporting Regulator is a Senior Executive Service employee of the Department who is responsible for administering, monitoring and enforcing compliance with the Act.

Reporting entity

Reporting entity has the meaning given by section 7 of the Act.

A reporting entity is any of the following:

  • Entities that are constitutionally covered, carry on an enterprise in Australia, and
  1. the total income for the entity for the most recent income year was more than $100 million
  2. if the entity is a controlling corporation, the combined total income of the controlling corporation’s group for the most recent income year was more than $100 million
  3. if the entity is a member of a controlling corporation’s group that has a combined income of more than $100 million for the most recent income year, the total income for the entity for the most recent income year was at least $10 million
  • Entities that are constitutionally covered entities and before the start of the relevant income year give the required notice to elect to become reporting entity (a volunteering entity) at the start of that income year

Reporting period

Reporting period has the meaning given by section 8 of the Act.

The first six months of each income year for the reporting entity and the remainder of each such income year.

Reporting window

The three-month period in which the reporting entity must submit their Payment times report for each reporting period.

Responsible member

Responsible member has the meaning given by section 5 of the Act.

A responsible member of an entity may be any of the following:

  1. an individual member of the entity’s principal governing body who is authorised to sign the Payment times report, for example as a member of a company’s board of directors
  2. the sole trustee of a trust
  3. the individual constituting the corporation of a corporation sole; or
  4. the administrator of an entity under administration within the meaning of the Corporations Act 2001

the Rules

The rules has the meaning given by section 5 of the Act.

A legislative instrument, made by the Minister, which prescribes matters necessary or convenient for carrying out or giving effect to the Act.

Small business

Small business has the meaning given by section 5 of the Act.

An entity that is described as a small business by the Payment times Small Business Identification tool.

The tool identifies businesses as small businesses if they carry on an enterprise in Australia, have an ABN and their annual turnover was less than $10 million for the most recent income year.

Small business invoice

Small business invoice has the meaning given by section 5 of the Act.

A document issued to an entity that notifies them of an obligation to pay an amount to a small business supplier.

Small Business Supplier

Small business supplier has the meaning given by section 5 the Act.

A small business supplier means a small business that supplies goods and services to the entity.

Standard payment period

A supply payment period on offer for inclusion in the entity’s contracts with small business suppliers. Where there is no supply payment period on offer, it is the supply payment period most commonly included in the entity’s contracts with small business suppliers.

The contract can be written, oral, or partly written and partly oral.

Supply chain finance arrangement

An arrangement under which the procuring entity undertakes to pay the supplier’s invoice, themselves or through a third-party intermediary, before the end of the relevant payment term if the supplier agrees to accept a discount on the payment.

Supply payment period

The period within which payment is required to be made for the supply of goods or services, disregarding any applicable supply chain finance arrangement.

Territory

Includes the Australian Capital Territory, Northern Territory, Jervis Bay or an external territory of Australia.

Total income

Total income has the same meaning as in section 3C of the Taxation Administration Act 1953.

The scheme applies this meaning of total income to all individual entities. It is not limited to entities that lodge tax returns. In some cases this will mean that an entity which would not ordinarily calculate its ‘total income’ because, for example, it is part of a tax consolidated group structure, lodges a non-corporate income tax return or does not lodge any income tax return at all, will need to calculate its notional ‘total income’ to determine if they meet the relevant income threshold.

Total income is an accounting system amount and generally corresponds to the total of the relevant amounts in an entity’s financial statements or financial records for the income year, prepared in accordance with Australian accounting standards.

Trade credit arrangement

An arrangement which a procuring entity and a supplier agree that payment for the supply of goods or services to the supplier is to be delayed to a time after the supply.

Volunteer reporting entities (CCE)

CCEs, with less than $100 million total annual income, which have elected to participate in the Scheme as volunteer reporting entities.