For most of us accountants, your university degree focused on compliance and the complex number crunching you needed to master to balance the books. There was this sense that clients delivered folders of invoices and shoes boxes of receipts for you to work your end of financial year magic. In between these pressure times, everyone more or less sat in the dark. Compliance was the future – remember that?
But now the way SMEs achieve compliance is changing, thanks to an interesting combination of technology and government action and nowhere are the changes being seen more graphically than in Australia. However in 2014, we ranked 124th of 148 countries for ‘burden of government regulation’ in the World Economic Forum Global Competitiveness Index. The Productivity Commission estimates that regulation compliance costs could amount to as much as a whopping four percent of Australia’s GDP.
The Abbott Government’s Cutting Red Tape program is driving such compliance-based savings. This focus on productivity increases is heralding a new ATO – ‘cutting its own internal red tape and streamlining its processes for broader de-regulation efforts’.
The ATO’s new online tax return service, myTax, aims to save 1.4 million taxpayers $160 million a year in compliance costs – simply by pre-populating simple online tax returns. Since launch of the myTax for tax time 2014, almost 750,000 tax payers had lodged returns. So in year one of operation it has reached 50 percent of its target audience. Not a bad result and certainly something we may not have expected from the traditional ATO.
Up next will be the upcoming changes to GST and PAYG reporting and how this will relieve the admin burden for an estimated 447,000 small businesses across Australia. Those businesses with no GST payable can stop lodging business activity statements, saving the SME sector around $67 million in accounting costs every year.
This is having a massive impact on the accounting sector’s bottom line. The Government’s initiatives alone have already identified compliance savings in excess of $300 million – dollars that will no longer be filtered through the accounting profession.
An interesting fact to ponder is how will the ATO deliver these changes? For those accountants already using cloud accounting platform solutions you are well positioned to electronically deliver documents securely and cost effectively to clients and back to the ATO. However, if you are still operating in the traditional model then expect to become a printing and mail house for the ATO.
Since 2011 it has been illegal to send a TFN by email as it is not deemed secure. We have a new Privacy Commissioner who has signalled warnings will be few but penalties will be regular for offenders. Who knows when this will hit the accountancy profession – it only takes one complaint. So what will you do – print and post?
There will also be no Notice of Assessment provided by the ATO. This will be electronically provided to the accountant. How are you going to let your clients know? You can’t email it and again you will just become a print and mail house for the ATO. Plus, with mail deliveries dropping to three days per week this is not the most timely or efficient way of communicating with clients.
In addition, there is discussion that a standard chart of accounts can be electronically submitted again via standard business reporting methods ‘straight through’ to the ATO. Cutting out the accountant altogether. I wonder how many of the 2.7 million SMEs could work towards this. It is a significant cost saving for small businesses in particular.
From our recent survey – “Can the accounting profession ‘keep up’ with clients and the cloud”, more than 60 percent of those accountants we spoke to were unaware of the impact of the Government’s productivity drives and e-accounting on their business.
In a nutshell, the answer is that cloud-based accounting services transform the businesses of both the accountant and their clients. The light is on 24/7. With all Australian SMEs grappling with the same number one business issue – cash flow – automated cloud accounting platforms are the future. But for many it’s here now.
About the Research
“Can the accounting profession ‘keep up’ with clients and the cloud” was prepared for Wolters Kluwer by digital disruption specialist analyst house, CapioIT. Over 500 qualitative and quantitative interviews were conducted with SMEs and accounting firms to better understand current and future cloud computing investment perspectives.
Wolters Kluwer, CCH is a global leader in professional information services. Professionals in the areas of legal, business, tax, accounting, finance, audit, risk and compliance healthcare rely on Wolters Kluwer’s market leading information-enabled tools and software solutions to manage their business efficiently, deliver results to their clients, and succeed in an ever more dynamic world.