The 2022-23 Budget outlined some significant investments in Australia's Digital Economy Strategy along with other measures that will impact Digital Service Providers (DSPs). It was great to see DSPs directly mentioned in the budget papers in measures surrounding cash flow support and reducing red tape for small businesses.
Find our wrap up of the Budget below. The ATO will also share their Budget measure impact assessment in Online Services for DSPs shortly.
At a glance:
- Additional $130.1 million over four years to the Digital Economy Strategy. Read more below.
- $1 billion towards the Technology Investment Boost which applies immediately and runs until 30 June 2023. Read more below.
- $10.4 million over two years to redesign the Payment Times Reporting Portal and Register to improve efficiency and reporting.
- $23.7 million over four years to the Australian Bureau of Statistics to update the Australian and New Zealand Standard Classification of Occupation (ANZSCO) list on an annual basis. Further $19.9 million over four years to develop a new reporting application that allows small businesses to submit some business indicator surveys through their accounting software.
- $6.6 million over four years to the Australian Taxation Office to develop IT infrastructure required to share Single Touch Payroll (STP) data with state and territory revenue offices on an ongoing basis. Read more below.
- $1.9 million for the Digital Transformation Agency to further support development of the digital identity system including funding arrangements associated with digital identity legislation.
- $38.4 million over three years to implement the Government's response to the Inquiry into the Future Directions for the Consumer Data Right with a further $12.6 million each year from 2025 to 2026.
Updated Digital Economy Strategy
It was announced that an additional $103.1 million will go towards Australia's Digital Economy Strategy over the next four years. The Department of the Prime Minister and Cabinet took the opportunity to release a 2022 update to the Digital Economy Strategy (find the report here) which reflects on the work undertaken so far and the progress towards the Government's ambition of being "a top 10 digital economy and society by 2030".
The report mentioned various initiatives that DSPANZ and our members are currently involved in including eInvoicing, Modernising Business Registers (including Director IDs), Consumer Data Right, businesses using accounting software to submit ABS surveys and work around how technology solutions can make it easier for SMEs to comply with modern awards.
Technology Investment Boost
Small businesses with an annual turnover of less than $50 million will have access to a 20% tax reduction (which is capped at $100,000) for business expenses and depreciating assets that support digital adoption. This includes cloud based services, cyber security systems, eInvoicing and web design. This measure has been applied immediately and it will run until 30 June 2023.
Pre-Filling Payroll Tax Returns
The Government will facilitate the sharing of Single Touch Payroll (STP) data with State and Territory Governments on an ongoing basis to pre-fill payroll tax returns. New South Wales, Victoria, Western Australia, South Australia, Queensland and the Australian Capital Territory are currently participating in a trial data transfer to understand how STP data can deliver benefits around payroll tax. It's expected that the IT system implementation will be completed in late 2023.
Smarter Reporting of Taxable Payments
This measure will give businesses the option to report Taxable Payments Reporting System data via their accounting software at the same time as activity statements instead of the current annual requirement. It's anticipated that the new systems will be in place by 31 December 2023 for implementation by 1 January 2024.
Digitalising Trust Income Reporting
The Government will digitalise trust and beneficiary income reporting and processing which will give all trust tax return filers the option to lodge their income tax returns electronically. The measure is expected to commence from 1 July 2024 but this will be subject to advice from DSPs around their capacity to deliver within this timeframe.
Modernisation of PAYG Instalment Systems
The Government will enable companies to choose to have their pay as you go (PAYG) instalments calculated on their current financial
performance, extracted from their business accounting software, with some tax adjustments. It's expected that systems will be in place
by 31 December 2023 with the measure to commence on 1 January 2024 but this will be subject to advice from DSPs about their capacity
On the above measures (smarter reporting of taxable payments, digitising trust income reporting and modernising PAYG instalment systems), the Government will look to consult affected stakeholders, tax practitioners and DSPs to finalise the policy scope, design and specifications. The ATO has already started consulting on some of these topics. We encourage members with any feedback to contact us.
It has been great to see work that our members are already progressing mentioned as a part of the updated Digital Economy Strategy.
The Technology Investment Boost will see both businesses and DSPs benefit as they look for solutions to help digitalise business processes.
We look forward to working with our partners at the ATO on the measures around cash flow support and reducing red tape for small businesses once legislation has passed.