When Tax ‘’Just Happens’’. What Does This Mean For Business?

The impact of a large-scale digital transformation, created by a tax system where tax ‘’just happens’’ will be profound for businesses and the economy. The impact will reach far beyond preventing businesses from using the ATO as a source of credit to fund their operations mentioned in 2030, the year when tax will just happen through digital transformation.

A survey conducted by CPA Australia indicates that businesses who have embraced digital technologies are more successful than those who don’t. This was put to the test during the COVID-19 lockdowns, where digital businesses were quicker to adapt to the working from home model.

Greg Ellis, MYOB CEO, says “businesses on board with digital systems were eight times more likely to create jobs.” I would love to think that many small businesses will embrace digital change over the next few years.

39.4% of businesses currently don’t offer digital payment options. This represents a huge opportunity to move to digital payments to get paid quickly and improve cash flow. For example, data collected by Xero indicates that businesses offering Stripe payments on invoices are paid on average 15 days faster than those that don’t. Stripe is a payment gateway that allows customers to click on a link on an invoice emailed to them to pay you. There are also digital options for taking payments via direct debit, for example Gocardless.

Digital tech also has to produce productivity gains. Apps can reduce the labour-hours required to undertake a particular task. For example, in our business, we recently implemented an app that electronically processes all correspondence from the ATO, sending it to clients with an appropriate covering email without human input. This has given our admin team hours in their week back.

The ability to use your cloud based accounting system, such as Xero, to engage in real time decision making. Apps like Xero offer so much more than recording transactions once a quarter to calculate GST and taxable income at the end of the year. Your accounting software is a valuable tool for managing cash flow, business growth and strategic opportunities.

Despite the upside of investing in tech, the investment in digital technologies isn’t matching the rest of the Asia-Pacific region. The survey by CPA Australia showed that smaller businesses shrank in 2021 than grew, which is contrary to what occurred in other parts of the Asia-Pacific, which have higher levels of digitisation and endured longer lockdowns. This shows a real reluctance to change by Australian businesses.

With more business on the digital journey, cyber attacks will become more common. According to CPA Australia Research, small businesses underestimate the prevalence of, and are under-prepared for cyber attacks. According to the government's Australian Cyber Security Centre, Russia’s invasion of Ukraine has increased the likelihood of cyber attacks on business. I see this cyber security as a major challenge and risk for small businesses who are cash tight and time poor, and likely have no interest in more technical aspects of tech. Although initiatives like eInvoicing will mitigate some of that risk. See our blog 2030, the year when tax will just happen through digital transformation for more information on eInvoicing.

It will become impossible to dabble in a side hustle, to test the viability of an idea, without investing in digital technology.

Investing in digital technology goes far beyond the initial cost of a software subscription. There is the time investment in researching the best tech solutions for your business, implementation, training and developing new workflows. The business space will be reserved for only those who have the commitment to embrace the new digital world.

Making tax possible by 2030 sounds like an impossible task. To find out how, read our blog How is making tax ‘’just happen’’ possible by 2030?

If you would like specific advice tailored to your business and circumstances, Accounting Heart offers affordable service packages where you can work with Sonia one-on-one to help you get your business where you want it to be. Book your FREE Discovery Call to find out more.

Disclaimer: This is general information only and is not advice of any sort. No warranty or representation is provided by Accounting Heart Pty Ltd as to the accuracy, currency or completeness of the information contained in this blog. Readers of this blog should not act or refrain from acting in reliance upon any information contained herein and must always obtain appropriate taxation and / or other advice as may be appropriate having regard to their particular circumstances.