To ease some of the pressure last year, we saw the ATO advise taxpayers who wanted to lodge their tax returns early to hold off on filing until their employers have finalised income statements.
This year, the process is likely to become even more stressful, with added COVID-specific tax questions arising as a result of the hybrid working model and JobKeeper payments.
Despite the issues COVID brings to the fold, the truth is that tax time is admin time. The workload majority for accountants falls on administrative tasks, such as balancing books, collecting business costs, collecting invoices, and chasing approvals and signatures. One of the main reasons tax time requires such a significant time commitment is due to the use of paper.
Accountants are having to organise and file paper receipts, invoices, documents and signatures.
This has become much tougher as workforces navigate new hybrid working models. With thousands of documents requiring signatures being mailed across the country, these documents are now being printed on home printers, and accounting teams are no longer able to collaborate as they usually would during this period.
This is where digital documents and e-signatures play an important role in enabling a productive and efficient tax time.
Digitising documents
A productive tax time means getting organised; however, the use of paper can create a serious bottleneck during this process. By digitising documents, accountants can easily store, file and search for specific files when needed. If documents and records are in a variety of formats, the best way to get organised is to standardise documents by converting them all to PDF. This way, documents can be combined, edited, reorganised, or private information can be easily redacted.
Digitising documents has become much easier than ever before. To help turn physical documents into digital scans, accountants can use a scanning app, such as Adobe Scan, to take a photo of any document and convert this to a PDF document.
This works especially well when needing to scan a large batch of documents, which can be combined into one PDF document. Scanning and digitising documents should be a method that’s used throughout the year, as opposed to just tax time. This means paper receipts, invoices and documents are ready at tax time.
By using digital documents, accountants also can streamline the entire tax time workflow. Once a document is signed and approved, it can be easily sent, signed and submitted for tax purposes.
Are e-signatures legal and accepted by the ATO?
E-signatures have been legally acceptable for accounting practices for over two decades. In Australia, the acceptance of e-signatures dates to the introduction of the Electronic Transactions Act in 1999. However, the adoption of e-signatures has only accelerated in recent years.
Our research found that 76 per cent of respondents surveyed across APAC signed more documents electronically in the last six months of 2020 than in the past two years. In fact, almost half (48 per cent) of Australians have signed documents electronically in the last two years, with current adoption rates highest among Millennials (61 per cent).
While most documents can be signed electronically, there are a few specific use cases or exceptions in which a document requires a wet signature; for example, powers of attorney, legal proceedings, or some documents which require a witness. That being said, there are solutions to assist with the witnessing process. For example, an accountant can use Microsoft Teams with a client to fulfil the witnessing requirement.
From an accounting perspective, the Australian Taxation Office (ATO) specifies it accepts electronic signatures for tax returns. All types of digital signatures are legally accepted, unless the accountant is dealing with a specific type of document that requires a wet signature.
To support Australian accountants, Adobe has partnered with Xero to allow e-signatures to be used within its software. This means Xero customers can use e-signatures to complete tax returns and business activity statements (BAS), which are both accepted by the ATO.
E-signature security and best practice
Accountants need to be aware that the data they are capturing with an e-signature is sensitive and, therefore, to avoid legal issues, accountants need to ensure the data is being stored onshore and securely. E-signatures need to be signed with a secure solution that complies with security industry standards.
For example, Adobe’s solutions comply with local data standards, including completing an assessment by the Australian Information Security Registered Assessors Program (IRAP) for Adobe Sign, as well as global data standards, such as ISO 27001, the international standard on information security management.
To better increase the level of security, accountants should use multi-factor authentication and one-time password codes that are sent to the signer before accessing and signing the document. PDF documents can also be locked and restricted, meaning those documents are password restricted.
With the added complexity surrounding COVID and the lack of collaboration due social distancing restrictions, digital documents and e-signatures offer one of the most effective ways for accountants to minimise administrative requirements, achieve a productive tax time and accelerate efficiency across the entire business.
Chandra Sinnathamby, head of Adobe Document Cloud, Asia Pacific
Care is always needed in adopting electronic signatures. Is the practitioner trying to make their own life easier or the clients? Particularly with SMSF, there are are many elderly clients who don’t have computers, or don’t know how to use them, and don’t have printers and scanners at home. Electronic signatures are not a one size fits all approach. To impose electronic signing on all of your clients is a bit arrogant in my opinion. Be flexible, paper still has a part to play.