The Government has committed to 'pay bills on time'. As part of this commitment legislation has been introduced effective 1st November 2018, which requires that interest is paid on any undisputed invoice meeting certain criteria that is not paid within 30 calendar days of the date it is received by a public authority.
The main criteria for determining whether interest is paid include:
- The invoice has a value of $1 million (GST exclusive) or less
- The amount of interest to be paid is $10 or more
- The invoice was issued by a business which is incorporated under the Corporations Act 2001 (Cwth)
- The invoice has been correctly rendered (e.g. GST compliant, appropriately addressed, etc.) and is not disputed.
The legislation excludes certain invoices, including where the associated contract:
- Makes specific provision for payment terms that are greater than 30 days
- Makes specific provision for the payment of interest if a payment is not made in accordance with the terms of the contract
- Is covered under the Building and Construction Industry Security of Payment Act 2009.
The scope of the Act has also been expanded to cover all businesses trading with the SA Government, rather than the previous limitation to small businesses.
Where applicable, interest will be calculated for each day an invoice remains overdue past 30 calendar days, applying the Reserve Bank Cash Rate (at the time) plus a 5% penalty. The calculated amount of interest must be paid to businesses within 48 hours of when the overdue invoice is paid. There is no requirement for businesses to request interest payments - this process will occur automatically.
Vendors can use the late payment interest calculator to calculate interest they may be entitled to.
Please refer to the agencies page for a list of agencies covered by this legislation.
A copy of the Act, amendment Bill and Regulations is available from www.legislation.sa.gov.au.
Further information regarding the new legislation, including Frequently Asked Questions, have been published on the My Invoice website.