The government has opened a Business eInvoicing Right consultation. Here’s how it would work

e-invoicing

Minister for Superannuation, Financial Services and the Digital Economy Jane Hume. Source: AAP/Mick Tsikas.

Small businesses selling to large companies could legally demand that their trading partners adopt electronic invoicing, under a new Business eInvoicing Right (BER) put forward by the federal government.

On Wednesday, the government opened consultation on the establishment of a BER that would legally require a business to adopt electronic invoices if a business they trade with requested it.

According to Minister for Financial Services and the Digital Economy Jane Hume, the government wants to investigate how the BER should be adopted and whether it should be rolled out in stages.

Under the government’s proposal, the BER would be delivered in phases, with the first phase to include large businesses, and the later phases to include small and medium-sized businesses.

A staggered rollout

In the first stage of the proposal, SMEs could exercise their right to request e-invoices from a large business. Larger businesses would then be legally required to send the SME an e-invoice.

Over time, medium businesses and then small businesses would also be covered by the BER, meaning they would have to adopt e-invoicing, if they received a request from another business.

To make and receive these requests, businesses would need to register for electronic invoicing on the Pan-European Public Procurement Online (Peppol) network.

Run by the Australian Taxation Office (ATO), Peppol is the framework for sending e-invoices and procurement documents that governments have widely adopted.

Simon Foster, electronic invoicing spokesperson at Xero, says legislating a right for businesses to request e-invoicing is “a really interesting approach” and one that he hasn’t seen in other parts of the world.

He says the accounting platform Xero, which offers e-invoicing as part of its subscriptions for no additional cost, supports the uptake of digital invoicing in Australia.

According to Foster, the government’s proposal wouldn’t put a burden on small businesses because they can choose to participate in the initiative, and ask their large business partners for e-invoices if they want to.

“It’s not until mid-2025 before there’s any requirement placed on smaller businesses, and I think that’s a sensible approach,” he says.

The consultation, which closes on February 22, is part of a wider push by the federal government to encourage the uptake of e-invoicing.

Last year, the federal government directed all of its departments and agencies to make the switch to electronic invoicing when procuring goods and services from SMEs by mid-2022.

There are now 10,000 businesses registered for Peppol e-invoicing, according to the ATO’s acting assistant commissioner Mark Stockwell.

In a statement, Stockwell described the figure as “a milestone”, thanking tax agents, bookkeepers, associations and businesses for contributing to the update of the platform.

“This achievement would not have been made possible without the support of our key partners,” Stockwell said.

The government’s latest consultation on the Business eInvoicing Right is its second call for submissions about mandating the use of e-invoices within 12 months.

Last November, Treasury also looked into different options for mandating the adoption of e-invoicing by businesses.

At the time, accounting groups said it wasn’t the right moment to make the practice compulsory because businesses were grappling with the pandemic and needed time to consider software options.

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Prasad
Prasad
1 month ago

Legal requirement is necessary, otherwise there will never be a level playing field. Simon Foster from Xero is not informed that over half of the countries globally are mandating issuance of e-invoicing, and worst than that he is not informed that his customers in Samoa and Fiji are obliged to issue e-invoicing. Xero should take this more seriously.

Simon Foster
Simon Foster
1 month ago
Reply to  Prasad

The reason we like the BER is that it is quite different to the mandates in other parts of the world; the vast majority of which operate on a model where the government receives a copy of each tax invoice. Latin America has led the world on this process and it’s been successful for their requirements – ensuring indirect tax collection. The Australian Government has been very clear that this is not the driver here, and that the ATO does not see or collect the actual eInvoices. Rather, eInvoicing is about the productivity and security benefits to business and the broader economy.

Where I see the BER as being unique is that it is market led, with the trigger for the legal requirement being a request to suppliers from their eInvoicing registered customers. A small business that wants to digitise and improve their efficiency and cashflow gains a right to receive eInvoices from their suppliers. That’s very different to an eInvoicing mandate that is about the government more efficiently collecting tax.