Back when I started as an accountant, tax returns were typed (using carbon paper) on forms provided by the ATO. Everything was paper based – records, returns and interaction with the ATO! It was a slow process and didn’t change much from year to year. However, it did utilise current technology (yes, typewriters and carbon paper were technological breakthroughs at some stage).
Fast-forward to last week and the ATO have announced a Digital by default initiative which essentially will require everyone to interact with the ATO digitally. Looking at it from the ATO’s point of view, they have had a significant number of staff cuts but are still expected to collect the cash to run the country as efficiently as possible.
Getting rid of the remnants of the “Paper by default” era is a logical step.
However, like most things digital, it goes a lot further (and who knows where it will lead in the future).
Electronic/online lodgements of income tax returns, activity statements are commonplace now so removing the paper option for these is not a major change for most of us. The ATO plans to have a safety net for those who will struggle in this area.
However, for businesses, the ATO envisages a “continuous electronic reporting” regime where transactions entered into your accounting software are automatically reported to the ATO using (their words) integrated software/digital solutions and event based reporting.
As I stated at the outset, I am not sure if this is good or not so good. You just need to be aware that the ATO will know a lot more about the details of your business. Have you paid super? What’s the bank balance? The ATO will know all the answers in real time.
But really, is this any different to other developments in the “internet of things” space? If you aren’t up on this, it’s the new systems that allow you to know the status of things that may be relevant to you via apps on your Smartphone.
So, for example, your car (or your garage door) may alert you to the need for a service, sensors in your home may assure you that everything is operating correctly when you are on holidays or remotely monitor the health status of patients.
This technology is already being used by businesses to identify when their customers need to repurchase the goods or services they supply.
Whether you are an early adopter of all things technological or a “conspiracy theorist” preferring to stay out of the system, you need to become familiar with the ATO’s digital plans and consider how they will affect you. Whether participating in the ATO’s consultation process will make any difference is doubtful. Digital by default appears to be a foregone conclusion but understanding
how it will affect you and the way you operate your business will help you gain from any red-tape cutting that results from this initiative.
The boarder issue is, of course, how you can use the same technology to get closer to your customers – that’s where the real opportunity lies.
The J&T Group is uniquely positioned to work with you in this space. J&T Accounting can assist you manage your digital interactions with the ATO & J&T Business Development can help you develop a digital strategy for your business.