Penalties for non-compliance

Under the Act, a court can impose civil penalties for non-compliance. This can be done if civil penalty proceedings are brought before it and a contravention is found.

Different penalty amounts apply to individuals and body corporates. Higher penalties apply to corporations. Individuals such as non-corporate trustees or members of a partnership face lower penalties.

The penalties are designed to encourage timely and accurate reporting. They are also designed to be large enough to provide a deterrent effect for non-compliance. The nature of the penalties are proportionate to the size and resourcing of reporting entities covered by the scheme.

Volunteer reporting entities are not subject to civil penalties under the scheme. If a volunteer entity fails to comply, the Regulator can:

• decide not to publish that entity’s Payment times reports until any non-compliance is addressed
• publish the identity of the volunteer and the details of their non-compliance on the Payment times register
• request the volunteer reporting entity carry out an audit
• exercise its monitoring and investigation powers

Civil penalties

A penalty unit equals $222 as of 1 July 2020.

Civil penalties do not apply to conduct engaged in before the enforcement day on 1 January 2022.

Mistake of fact

Reporting entities will not be subject to a penalty where a mistake has been made about the facts involved if, had those facts existed, the relevant conduct would not have amounted to a contravention of the scheme’s requirements.

If the reporting entity is a body corporate they can only rely on the mistake of fact defence if they can demonstrate they exercised due diligence to prevent the conduct. 

Reporting entities will not be able to demonstrate they exercised due diligence if they have:

• demonstrated inadequate corporate management, control or supervision of their employees or
• failed to provide adequate systems for conveying relevant information to those employees

Failure to report

Failure to provide a Payment times report by the specified time has a maximum penalty of:

• 60 penalty units for an individual
• or a maximum of 300 penalty units for a body corporate

These penalties can be applied for each day the entity does not comply. This starts from the end of the three-month period they have to submit a report.

For example, an individual was 9 days late in submitting a Payment times report. They could be subject to a penalty of up to a maximum of 540 penalty units. A body corporate could be subject to a penalty of up to a maximum of 2700 penalty units. 

Providing a false or misleading report

Submitting a false or misleading Payment times report has a maximum penalty of 350 penalty units for an individual. For a body corporate, the maximum penalty is 0.6% of the total income for the income year in which the contravention occurred.

For example, a body corporate with a total income of $500 million in 2022-23 provided information which painted a false picture of its payment performance in that same income year. It could be subject to a penalty of up to $3 million.

Failure to keep records

Reporting entities are required to retain information used to prepare a Payment times report. They must retain it for at least 7 years after the end of the relevant reporting period.

If they fail to do so, they can be subject to a maximum penalty of:

• 200 penalty units for an individual
• 0.2% of total income for the income year that the contravention occurred for a body corporate

Failure to comply with a notice to appoint an auditor and provide an audit report

Failure to appoint an auditor has a maximum penalty of:

• 60 penalty units for an individual
• 300 penalty units for a body corporate

These penalties can be applied for each day the entity does not comply with the timeframe. The timeframe is set out in the notice from the Regulator.

For example, a body corporate failed to respond for 9 days following the expiry of the notified timeframe. This could result in a maximum penalty of 2700 penalty units. For the same failure to respond for nine days, an individual could receive a maximum of 540 penalty units.

The same penalties apply to a failure to supply the audit report within the time period specified by the Regulator.

Failure to provide the auditor with all reasonable facilities and assistance necessary

Failure to provide an auditor with all reasonable facilities and assistance necessary has a maximum penalty of 200 penalty units for an individual.

For a body corporate, the maximum penalty is 0.2% of the total income for the income year that the contravention occurred.

For example, a body corporate with a total income of $500 million in 2022-23 failed to reasonably aid an auditor in that same income year. It could be subject to a penalty of up to $1 million.

Infringement notice penalties

An infringement notice requires the entity to pay a penalty for the alleged contravention and will set out the applicable penalty.

The court will enforce infringement notices given by the Regulator if they are not paid.

In the case of a single contravention, the penalty is the lesser of one-fifth of the maximum penalty that a court could impose and:

• 12 penalty units for an individual
• 60 penalty units for a body corporate

In the case of multiple contraventions, the penalty is the lesser of one-fifth of the sum of the maximum penalty that a court could impose for each contravention and:

• for an individual, the number of penalty units worked out by multiplying the number of contraventions by 12
• for a body corporate, the number of penalty units worked out by multiplying the number of contraventions by 60