GST and using or receiving digital currency

What to do when you receive and use digital currency as payment for goods and services

Digital currency as payment for goods and services

Receiving or using digital currency to pay for goods and services in your GST-registered enterprise is the same as using money, but it is different to trading digital currency.

Receiving digital currency

If you make a taxable supply and you receive digital currency as payment, the GST amount for that payment included in your business activity statement must be in Australian dollars.

Your tax invoice must meet the normal tax invoice requirements and include either:

  • the GST payable in Australian dollars
  • sufficient information to work out the GST payable in Australian dollars.

Examples of sufficient information includes the:

  • price expressed in Australian dollars
  • value expressed in Australian dollars, or
  • conversion rate used by the supplier, or a statement, to work out the GST payable if it is not in Australian dollars.

Using digital currency

If you use digital currency to make a purchase for your GST-registered enterprise and claim a GST credit, the GST amount of the credit in your business activity statement must be in Australian dollars.

To work out your GST credits, your tax invoice will include either:

  • the GST amount in Australian dollars
  • sufficient information to determine the GST amount in Australian dollars.

How to convert digital currency

To work out the value of your digital currency for your business activity statement, you must use the exchange rate on the conversion day that applies to you.

Exchange rate

If the exchange rate is in Australian dollars, you may choose to use the exchange rate:

  • from a digital currency exchange or website, or
  • agreed on between the supplier and the recipient.

If the exchange rate is in a foreign currency, you must convert the amount expressed in foreign currency to Australian dollars.

Conversion day

The conversion day is the date you use to convert your digital currency into Australian dollars.

If you account for GST on a non-cash basis, your conversion day is determined by whichever happens first of either the:

  • day you receive any of the payment
  • transaction date or invoice date.

If you account for GST on a cash basis, your conversion day can be the transaction date, invoice date or the day you receive any of the payment.



Why businesses should embrace eInvoicing

eInvoicing is a new way to send and receive invoices electronically directly between accounting systems

How? It’s all done via a secure platform called the Peppol network.

Not only does eInvoicing help facilitate faster payment times, but it’s also more efficient, accurate and – importantly – safer. In fact, everyone from enterprises to software providers and government agencies are jumping on board. And it’s easy to understand why. 

In Australia, eInvoicing represents a $28 billion opportunity thanks to increased efficiencies. What’s more, its security features make it a no-brainer for businesses of all sizes, particularly in today’s climate where cyber safety is a top priority.

To help learn more, Xero talked with Xero advisors Caryn Hill and Gabrielle Crooke to discuss their experiences and the benefits they’ve seen for small businesses. 

What convinced you to look into eInvoicing? 

Caryn: What excited me most about eInvoicing is the security aspect. Invoices travel straight from one accounting software to another via the Peppol network, meaning an email or PDF can’t be lost or tampered with. Everyone who uses it also has to register for the network (as eInvoices can only travel between registered entities), which offers peace of mind in knowing all the information is verified. 

Gabrielle: I have a few clients with quite a high turnover of Bunnings invoices. After I learned that Bunnings is a Peppol-registered company, I talked to my clients about eInvoicing as a potential solution. It’s awesome to see companies like Bunnings leading the way. Especially as research shows that more small businesses would register for eInvoicing if big business suppliers (e.g. Telstra, Woolworths, Officeworks) sent invoices directly to their accounting systems.

Why should small businesses embrace eInvoicing? Tell us about the benefits. 

Gabrielle: Alongside the security features already mentioned, the greatest benefit I’ve seen for small businesses is how quickly invoices appear in their accounting software. It’s faster and more accurate than any other system I’ve seen before, which makes reconciliation and paying bills easier for clients. As a Xero advisor, this reduces manual processing errors like double-ups or wrong dollar amounts – I have complete confidence that all the data coming through is correct. 

Caryn: In all my years as a bookkeeper, I don’t think I’ve ever had a month where every single invoice is just there. But eInvoicing has changed this. Business owners no longer have to scroll through their phones to find a blurry photo from weeks (or even years) ago or try to decipher the numbers on a faded receipt. It’s so easy to verify, reconcile and approve everything at the end of the month because it’s guaranteed that the data has been exchanged. This minimises processing time for me, as an advisor, and my clients, meaning we can both focus our energy on more important tasks.

Walk us through the registration process in Xero. 

Caryn: It was amazing how quick the registration process was for my clients. Everything was just there. For those with a Bunnings Trade account, we didn’t even have to notify them – the invoices immediately started coming in, which was fantastic to see.

Gabrielle: I found the registration process in Xero to be self-explanatory. After I had authorisation from my clients to sign them up, I followed the prompts; it was as simple as that. 

Where can small businesses go to learn more about eInvoicing? 

Gabrielle: My tip for anyone interested in eInvoicing is to do your research. According to Xero’s data, one of the top barriers to adoption for small businesses is not knowing enough about it. This is why Xero has its Resource Hub with plenty of helpful information to get started. And Xero advisors can also guide you through the process.

Caryn: Advisors can be a great source of knowledge when it comes to eInvoicing – after all, many of us are big advocates as it makes our job easier. I’d also recommend talking to your small business peers. If we can get the word out there, we’ll see more registrations which means more people will benefit!

Gabrielle: Ultimately, eInvoicing reduces stress. We all have busy lives, and no one needs more to do. So be sure to register now and thank yourself later.

Considering eInvoicing for your business? Head to Xero Central for a step-by-step guide on how to register in Xero in just a few clicks. And remember, your Allan Hall Xero Certified Advisors are available to answer any additional questions.


using xero on an iphone

5 tips for Xero users

Five tips from this year’s Xero quarterly product updates

Did you know that Xero has an inbuilt calculator? Are you across Xero’s inbuilt timesaver features? Across useful ways to use contact groups?

1. Save time with the inbuilt calculator 

Did you know that Xero has an inbuilt calculator? It allows you to calculate amounts as you create transactions. When you are in a numeric field in Xero, you can enter a calculation and then press Enter or Tab, and Xero will calculate the result. For example, entering 7+2 and then Enter will display as the number 9 in the field. 

The calculator is available in the Quantity, Unit Price and Disc % fields in transactions, and the Debit and Credit fields in manual journals.

In new invoicing, discount percentages are calculated automatically, so the calculator isn’t needed.

2. Add planned payment dates from the Awaiting Payment tab in bills 

This tip helps you manage cash flow and plan when to pay bills. You can add a planned date to a purchase invoice in the Awaiting Payment tab to create a planned payment schedule. 

This is great for businesses with a daily payment limit on their bank accounts, because Xero totals the bills as you select them — so you can see if the total exceeds your daily limit. If you’re using short-term cash flow in Xero Analytics, this also makes it easy to keep your planned payment dates up to date, so your cash flow forecast is more accurate. 

3. Use keyboard shortcuts to navigate around Xero 

Here’s a great timesaver which you can use from most screens in Xero. If you enter the forward slash (/), you’ll open the global search. You can then type a letter to navigate straight to a page. 

For example, entering ‘/b’ will take you to bills,  ‘/c’ will take you straight to contacts and ‘/d’ will take you to the dashboard. 

4. Use repeating invoices for customers who pay a monthly fee

For businesses with regular sales to particular customers, repeating invoices can be a big timesaver. Let’s say one of your customers pays you a monthly fee. You can set up a repeating invoice template so Xero automatically creates a new invoice each month.

Set how often you want Xero to create the invoice, choose the date of the first invoice and then select when the invoice is due. If it’s the same amount each month, click ‘Approve for Sending’. Then each month, Xero will create the invoice, approve it, and email it to your customer.

5. Add suppliers to contact groups for the method of payment

This is a useful way to use contact groups. If you pay some suppliers by bank transfer and others by direct debit, add them to contact groups for the method of payment. 

This lets you search the bills ‘Awaiting Payment’ page by payment type and you can sort, group, or filter the Payable Bills reports to make managing your bills payable and generating bank transfer payments easier.

Got a question about making the most of accounting or bookkeeping in your business? Get in touch with our Xero specialists who will be able to assist you with all your cloud accounting queries.



Understanding eInvoicing

Change can be hard, particularly when things seem to be working and the need to do things differently isn’t obvious.

Perhaps you’ve found this when it comes to invoicing for your business.

You may be used to sending PDF invoices via email and manually entering the invoices you receive into your accounting software. You may even be used to dealing with regular problems with invoicing, like late, lost or compromised invoices or mistakes.

If you think this is all the normal cost of running a business — it doesn’t have to be!

Switching to eInvoicing will help you reduce manual data entry, because eInvoices automatically appear in your business software, ready to be checked and paid.

While getting started with eInvoicing can seem daunting, it’s probably much easier than you think.

Deputy Commissioner for Small Business Deb Jenkins presents a new series of short videos about eInvoicing to help you out. They help explain how eInvoicing can benefit your business by helping you save time and money.

eInvoicing doesn’t give the ATO access to your invoice data. It’s not a compliance measure; it aims to reduce your admin, boost your cash flow and give you more time to focus on what matters most.

eInvoicing products and services are becoming more available over time. More than 16,500 Australian businesses are adopting it, including well-known and large Australian companies and federal and state governments.

There has never been a better time to get started. Talk to your adviser or business software provider today to find out about making the change.