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E-Invoicing Process in Australia

Updated: Mar 4

Introduction


With the rapid development of information technologies, a huge shift occurred in business processes from manual systems to electronic system. In this respect e-invoice applications rapidly evolved, and the governments started to implement e-invoicing projects covering all business transactions between governments and businesses.


E-Invoicing in Australia


Australia has adopted the Peppol framework as the common standard and network for eInvoicing. OpenPeppol gives authority to various countries to manage the Peppol framework for its members. In Australia, the ATO is the Peppol Authority. — B2G: Peppol — B2B: N/A


Archiving and Scope


You need to keep all records related to starting, running, changing, and selling or closing your business that are relevant to your tax and super affairs. The relevant information in your records must not be changed (for example, by using electronic sales suppression tools) and must be stored in a way that protects the information from being changed or the record from being damaged. You need to keep most records for 5 years. You need to be able to show ATO your records if they ask for them. Your records must be in English or able to be easily converted to English.


Electronic Invoices, Credit Notes, Remittance Advice, Purchase Orders, Order Response, Despatch Advice, Catalogues are the document types can be processed by Peppol.


Timeline and Format


Regarding B2B transactions, The Australian Government intends to make e-invoicing mandatory in several phases based on company size. Three phases were proposed:


1️⃣ From July 1, 2023, companies could request large trading partners to send their invoices electronically over the PEPPOL network. That means large companies would be obligated as of that date to be able to send electronic invoices in the PEPPOL format upon request.


2️⃣ From July 1, 2024, companies could request medium-sized trading partners to send their invoices electronically over the PEPPOL network. That means medium-sized companies would be obligated as of that date to be able to send electronic invoices in the PEPPOL format upon request.


3️⃣ From July 1, 2025, all companies would be obligated to exchange electronic invoices in the PEPPOL format.

Australia’s Progressive e-Invoicing Implementation
Australia’s Progressive e-Invoicing Implementation

A tax invoice doesn’t need to be issued in paper form.


For example, you can issue a tax invoice to a customer by: Using e-Invoicing (Peppol eInvoice), an automated direct exchange of invoices between a supplier’s and buyer’s software PEPPOL BIS Billing 3.0.


Content of e-Invoice


A tax invoice must include the following 7 pieces of information to be valid. Depending on the total price of the tax invoice and how you sell your products or services, there may be more requirements.


For sales of less than $1,000 (including GST), your tax invoices must include:


The words ‘Tax invoice’ — preferably at the top, your identity as the seller, such as your business name or trading name (contact details are optional, but recommended), your Australian business number (ABN), the date you issued the invoice, a brief list of the items sold, including quantity and price, the GST amount payable (if any). You should display the GST amount for each item separately, or, if the GST amount is exactly one-eleventh of the total price, you can use a statement such as ‘Total price includes GST’, the extent to which each item sold includes GST. You’ll meet this requirement if you either:


Show the GST amount for each item, clearly state that the total price includes GST.

A tax invoice
A Tax Invoice

Tax invoices for sales of $1000 (including GST) or more also need to show the buyer’s identity or ABN.


Technical Requirements


Peppol defines Business Interoperability Specifications (BIS) for various types of electronic documents, including invoices. The BIS specifies the structure, syntax, and semantics of the documents to ensure a common understanding and consistent interpretation across different systems.

ATO

The Australian Taxation Office (ATO) plays a role in overseeing the adoption and compliance of e-Invoicing standards in Australia. The ATO collaborates with industry stakeholders to promote adherence to standards and ensure a consistent approach.


Users in Australia can interact with the e-Invoicing system through various methods, including web portals, API (Application Programming Interface) integration, and other electronic channels. The specific method may depend on the platform or service providers chosen by the users and the capabilities of their invoicing and financial systems. Here are some common ways users can interact with the e-Invoicing system:


Web Portals, Integrated Accounting Software, API Integration, Direct System-to-System Integration, Mobile Applications, Email Integration, Government Portals and Platforms.


Additionally, the adoption of standardized formats, such as those defined by Peppol, contributes to the interoperability of different systems, making it easier for users to interact seamlessly across various platforms and channels.


Digital signature is Not Required.


AS4 Messaging Protocol: The Peppol framework, which is used for e-Invoicing in Australia, utilizes the AS4 (Applicability Standard 4) messaging protocol.

PEPPOL

Peppol assigns unique identifiers to each participant in the network, known as PEPPOL Identifiers. These identifiers help in routing and identifying the correct recipient for electronic documents, including e-invoices. They contribute to the verification of the parties involved in the e-invoicing process.


Melasoft E-Invoice Solution for Australia


Melasoft E-Invoice Application is an SAP addon that runs on client ERP system under the control of the client. The main components of Melasoft E-Invoice Application are inbound cockpit, outbound cockpit, periodic programs, and customizations as shown in the following figure. Each component is explained in following sections.

SAP Addon
Melasoft E-Invoice Solution Applications

Melasoft Outbound Cockpit


Melasoft Outbound Cockpit is an SAP addon that works on the client SAP system. It is under the control of client as the other modules of the SAP system. This cockpit extracts invoice information from ERP system, creates XML files, and sends them to the Tax Authority Portal using web services. The outgoing invoices can be monitored, controlled, cancelled, or sent to the tax authorities’ portal. In addition, the status of the outgoing documents can be monitored using the web services. General status of the system is shown below:

Melasoft E-Invoice Add-on
Melasoft E-Invoice Add-on

Melasoft Inbound Cockpit


Melasoft Outbound Cockpit is an SAP addon that works on the client SAP system. It is under the control of client as the other modules of the SAP system. The incoming invoices are pulled from Tax Authority Portal using periodic jobs and they can be monitored, approved, or rejected over the incoming invoices cockpit. Moreover, the status of the incoming invoices can be monitored if needed.


Periodic Programs


Periodic programs run automatically per time interval defined or manually and used for updating information on Melasoft E-Invoice Program. In standard package two main jobs are used, namely “Get / Update Invoice” and “Update List of All Registered Companies”. The first job is used for updating status information of incoming and outgoing invoices in Tax Authorities Portal and check whether new invoices are submitted or not. The second job updates the lists of companies that are registered to the Tax Authorities Portal.


Customizations


Customizations are used for customization of Melasoft Solution according to client company. The number and scope pf customizations depend on the company requirements. In general, the customizations are related with the invoice types, tax categories, tax exemptions, discounts, connection parameters, mapping classes, unit codes, and user login maintenance. The customizations are determined as a result of functional analysis conducted on the system.


Key Features of Melasoft Solution


Melasoft Solution is an SAP add-on that works within the SAP system and under the control of the client. The solution provides two distinct cockpits for incoming and outgoing invoices. The users can continuously monitor the status of the invoices in government portal and view the documents in different formats. The solution is flexible and can easily be adapted to different operational requirements. Also using the outputs, the solution can be improved, and new capabilities can easily be adapted. Different authorizations can be defined to users and hence different operations can be assigned to different employees. All operations are logged and can be viewed when necessary. In addition to these features, the solution can be modified according to requirements of the customers.


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