E-invoicing is set to feature prominently over the upcoming months as the federal government has announced a $15.3 million investment ahead of the upcoming federal budget.
The investment is included in the $1.2 billion package unveiled by the Australian Government on Thursday 6th May which aims at accelerating Australia’s digital adoption.
In an aim to continue its push towards mandated e-invoicing, the federal government will provide both the Treasury and the Australian Tax Office (ATO) operating under the name the Australian Peppol E-Invoicing Authority with a total of $15.3 million to improve business e-invoicing awareness and adoption.
This is set to include working with payment providers including; Visa, eftpos, Mastercard and New Payments Platform Australia to integrate e-invoicing into the main payment methods used by businesses.
Educational activities will also be undertaken to raise business awareness of the benefits of implementing e-invoicing, and are likely to include cost savings, faster payment times, a reduction in errors and a reliable and secure transaction of data.
The federal government will also conduct supply chain pilots with large businesses and also plans to work with states and territories to expand public sector e-invoicing adoption.
A large number of Australians are already participating in the digital economy, some without even realising it. Examples of consumer behaviour that situates as digitalisation includes every contactless purchase, e-invoice, business website or small business going online.
By the Australian Government deciding to put more money into e-invoicing and taking up other emerging technologies this will help unlock the value of data, build skills for a modern economy, and enhance government service delivery.
The Federal Government often praises e-invoicing for its productivity benefits as opposed to its ability for tax compliance potential. Based on how the service is being used overseas it is highly possibility that e-invoicing will be used in the future to prevent tax evasion and to combat the black economy.
As the Federal Government considers its approach towards mandating e-invoicing for businesses, the ATO and other government agencies have announced that they will not be able to access e-invoices exchanged between businesses. This means they will not be able to view the e-invoices contents and details.
This announcement rules e-invoicing out as a tax compliance tool in Australia. However, a number of governments across the globe have increasingly chosen to utilise the benefits of e-invoicing to facilitate tax compliance.
By looking around the world, electronic invoicing has proven to be one of the most efficient ways to guarantee that value-added tax credits are correctly attributed to trading partners. The validation of invoices is one of the major drivers to combat value-added tax (VAT) evasion around the world, which can harmfully impact entire supply chains.
South Korea is a great example of a country that illustrates how electronic invoicing can be applied to reduce value-added tax evasion and increase automation of tax compliance functions.
The results of a survey conducted which included the responses of South Korean tax payers and tax practitioners found that 69% of the participants agreed or strongly agreed that compulsory electronic tax invoicing has contributed to decreasing value-added tax evasion by raising transaction transparency. 73% of the people surveyed agreed or strongly agreed that it has enhanced taxpayer service by facilitating the convenience of tax filing or automating the issuance of invoices. This survey was conducted as part of a World Bank research study.
The black economy costs the Australian economy approximately $50 billion. As the ATO continues to expand its data-matching capabilities to discover any non-compliance, e-invoicing could in the foreseeable future take on a tax compliance role.
In 2020, the ATO flagged that they might soon begin automating business activity statements (BAS). This would be done by tapping into a business’s natural system, including their bank accounts.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
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