The Australian Tax Office (ATO) has announced that it has no plans to use e-invoicing as a way of facilitating tax compliance, despite fears that Australia may eventually move to emulate other countries by scrutinising e-invoicing data.

The ATO has assured businesses that the Tax Office has not been granted the authority to view the contents and details of e-invoices, despite its role in developing and administering the e-invoicing framework in Australia.

“A lot of people are sceptical that the ATO is involved for other reasons, other than efficiency reasons, that it’s about compliance. I can assure all members here today that we have no compliance or no visibility of the data. There is no infrastructure held by the ATO, it is all done through the software of the businesses, so we don’t actually get to see any of the data at all” says Mark Stockwell who is the ATO assistant commissioner.

“Even the addressing system that actually directs the invoice from one party to another, that infrastructure is not owned or held by the ATO. So, there’s no way we can see who’s sending invoices to anyone else.

“I can only re-emphasise this point. I know you have to trust me, I’m sure you always trust the Tax Office, but we’re not in any way looking to look at the information or nor can we” says Mr. Stockwell.

Despite this announcement from the ATO, The Australian 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. 

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.  

The Australian Government’s $1.2 Billion Digitalisation Package

The Australian Government has announced that it intends to make a huge investment in digital education for works, along with artificial intelligence, incentivising investment in game, refreshing government services, digitising SMEs, data management, emerging aviation technologies and cyber security.

The ambitious new technology package is worth $1.2 billion was announced on Thursday the 6th May aims to have Australia’s economy perceived as a “modern and leading digital economy” by 2030.

Of the $1.2 billion, more than $100 million plans to be spent on a new pilot program that aims to helping Australians build their digital skills. The investment will result in an introduction of word-based cadetships to drive a “cyber workforce” and scholarships for emerging technology graduates.

An additional $124.1 million will be spent on artificial intelligence enterprises, such as; a National Artificial Intelligence Centre, led by CSIRO Data 61, bolstered by a $50 million investment in government cyber-security enhancement. 

The Treasury believes that a strong digital economy is key to an economic future that encourages job creation and wage growth. Australia’s Digital Strategy will enable businesses across the country to capitalise on the opportunities that these new technologies are creating. These important digital adoptions will improve Australia’s competitiveness on a global scale and lift the productivity of Australia’s workforce.

The government will allocate $200.1 million for a complete revamp of myGov in a bid to improve its user experience so users can find what they need easier, supplemented by an additional $301.8 million bumper to the My Health Record and digital identity systems. 

The Australian government will also incentivise investment in video game development as it introduces a Digital Games Tax Offset of 30 percent to encourage Australian developers in an increasingly competitive international market. 

As part of the Digital Games Tax Offset incentive, the federal government will later announce changes to the way businesses are able to claim depreciation of intangible assets like intellectual property and in-house software. 

Small businesses are set to receiving a $12.7 million boost as the government expands the Australian Small Business Advisory Service. The sector will also receive a $15.3 million investment in e-invoicing to encourage wider uptake, as the government contemplates a mandate through a phased approach starting with large businesses.

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. 

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. 

Post Author: Craig Dangar

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