- Single touch payroll data will be used to pre-fill payroll tax returns, reducing compliance costs
- The taxable payments reporting system will be digitalized allowing real-time reporting and eradication of the annual return
- Trust tax returns will be lodged electronically
- Excise reporting will be aligned with BAS reporting for some
Nine in ten firms adopted new technologies to improve business operations during the COVID pandemic. Over the past two years, Australian small and medium enterprises achieved more growth in web presence and use of business software than they had in the previous 10 years combined.
In last year’s Budget the government described the digital economy as key to securing Australia’s economic future and recovery from COVID-19, saying digitalisation was crucial to underpinning improvements in jobs, productivity and making the economy more resilient 1. As part of the 2030 Digital Economy strategy, the 2022-23 Budget contains more initiatives with the potential to provide real time benefits to business by easing compliance burdens, giving owners more time to concentrate on running their business.
It also contains an initiative to encourage small business to invest in digitalisation by providing an additional 20% deduction for digitalisation costs.
It’s the ‘Spend a $1 Get a $1.20 Tax Deduction Deal’
Small business technology investment boost
From 29 March 2022 to 30 June 2023 small businesses (less than $50 million turnover) can deduct an additional 20% of business costs and depreciable assets that support their digital adoption, such as portable payment devices, cyber security systems, or subscriptions to cloud-based services. There is a $100,000 annual cap.
The boost for eligible expenditure incurred by 30 June 2022 will be claimed in the following income year. Expenditure incurred after 30 June 2022 will be claimed in the tax return for the year ended 30 June 2023.
Pre-filling payroll tax returns
Digitalisation of payroll systems through single touch payroll (STP) provided real time JobKeeper benefits during the COVID pandemic. CA ANZ has long advocated for STP to be extended to payroll tax and the government has announced that by late 2023 it will be able to share STP data with State and Territory Governments to pre-fill payroll tax returns. This initiative should encourage alignment of relevant definitions between the tiers of government.
Taxable payments reporting system
By 1 January 2024, businesses will be able to report taxable payments reporting system (TPRS) data through software at the same time as activity statements. Businesses that opt into automatic reporting will no longer need to complete the yearly Taxable Payments Annual Report. This has the potential to remove a major compliance cost by aligning government reporting with natural accounting systems.
Digital trust income tax returns
By 1 July 2024, the government expects trusts will have the option to lodge income tax returns electronically. Digitalising the reporting of trustee and beneficiary obligations will reduce errors and processing times and create capacity to pre-fill beneficiaries’ tax returns.
Altering excise reporting
From 1 July 2023, businesses with an annual turnover of less than $50 million can lodge and pay excise and excise-equivalent customs duty on a quarterly basis. Returns and payments will be required no later than the 28th day of the month after the end of each quarter.
CA Budget conversation starters
The Budget will prompt discussions with clients about digitalisation. CAs need to explain how they can help clients achieve efficiencies and increase tax deductions.
Steps to consider:
- Identify clients that have not yet embraced modern business practices.
- Discuss the two-way benefits of integrating business systems with your practice software.
- Emphasise not just the benefits of lower tax compliance costs, but also how real-time management reporting can boost business performance.
- If the client agrees, scope the work involved and provide the client with indicative costing.
1 The potential benefits to the Australian economy through digitalisation have been estimated to be as much as $315 billion over the next decade, with the potential to create up to a quarter of a million new jobs by 2025
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