Filing Taxes Has New Meaning In Australia, New Zealand

Image credit: iStockphoto/Milaspage

The Government sector has never been known to be particularly agile. Yet, in Australia and New Zealand, a new digital tax compliance infrastructure has played a significant role in the COVID-19 economic recovery.

New Zealand launched its Payday Filing system in 2018, and Australia introduced the Single Touch Payroll system. Both of them offered a way for businesses to report their payroll and taxation data more efficiently and with a greater degree of compliance.

In both countries, the systems have been a success in their original purpose. While there has been pain at the small end of the market, particularly among family-operated businesses which still use paper systems, by and large, the new systems have created a win-win situation.

The governments are getting the data faster, and businesses are not having to report multiple times and in different formats. Accountants have said goodbye to mundane and monotonous work and now focus on the strategy and advice part of what they do.

Granular fiscal assistance

So far, so good. But what is more interesting is how both Governments have almost reverse-engineered these new systems during COVID-19 to understand the economy better. More accurate and timely data is helping them to target fiscal assistance — particularly in the case of New Zealand.

In Australia, the Australian Bureau of Statistics has had access to real-time payroll data and been able to break that down by gender, age, industry, and location in a way it has never been able to do. 

In New Zealand, Statistics NZ has had the same clarity on the economy. The systems built by Inland Revenue were also for sending targeted payments to businesses as part of the Government’s fiscal stimulus.

In both cases, government agencies understood that the new systems they had built flowed both ways and could be used in different ways beyond their original purpose. 

They are also excellent examples of the power of data. 

New use cases

The reporting sent to the Governments by businesses as part of their payroll compliance has many other potential uses beyond ticking the compliance box. The systems themselves can be expanded to cover different agencies and use cases.

In Australia, for example, Phase 2 of STP is coming in July 2021. It will deliver more granular information to the Australian Tax Office and open up uses for the social security system for state government-based payroll tax. The Fair Work Commission can also monitor potential payment problems and prevent wage theft.

To return to an often-used analogy, these systems are the plumbing, wiring, and roads of the 21st century. Like those other infrastructures, they are not just there for one purpose but also for whatever uses innovators can imagine.

The other exciting thing about these tax compliance systems is the way that they have given a major seat at the table to accounting software and payroll solutions providers. 

In Australia, for example, the Phase 2 STP rollout has largely been dependent on the software providers re-engineering their products. It allows the providers to work with the Government system as the intermediary between the accountant, client, and the tax system.

Payroll companies are plugging their APIs into the Australian Taxation Office systems, and, in New Zealand, the Inland Revenue is creating something called Gateway to enable faster access.

We have seen what has happened in other industries when APIs are connected; it ushers a new wave of innovation. 

There are privacy and legal issues around the nature of the data, which can be made available from the tax system. But those strictures can still be satisfied, and innovation delivered. 

Governments take the lead

Phase 2 of Australia’s STP and the opening of New Zealand’s Gateway may be the beginning of something quite significant and forward-looking, delivering use cases we lack the imagination to conceive of today.

All this is a pretty exciting outcome from a reporting and compliance system that was the sort of thing to put startups and innovators to sleep at face value. 

On this occasion, we have Government planners and even the COVID-19 response to thank for what is a new highway of data. It can bring a slew of new applications both to Government and business in the coming years.

Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and HR&DigitalTrends, and the editor of NextGen Connectivity. His fascination is with how businesses are reinventing themselves through digital technology and collaborate with others to become completely new organizations. You can reach him at [email protected].

Image credit: iStockphoto/Milaspage