From next month, anyone wanting to run ads referencing politicians, social issues, the election or political parties would need to confirm their identity and publicly disclose who was responsible for the ad, Facebook said.
They would also have to provide public contact information so they could be held accountable for the ads.
Facebook said it would remove ads that could influence the election or referenda that were not in line with its policy.
All advertisements would be stored in a library for seven years so people could see how much it cost and who interacted with it, the social media giant said.
The library would be publicly accessible so people could study and analyse political advertising.
Labour, the Greens and ACT have already signed up for the transparency tool. The 2020 general election is set to take place on Saturday, September 19.
