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The future according to the Tax Commissioner provokes a range of reactions from the profession.
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‘Confusing and contradictory!’ or ‘Telling it like it is!’
09 September 2022
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12 minute read
The tax profession has responded with everything from confusion to complete agreement with the Tax Commissioner’s vision of a future where “tax just happens”.
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One who responded strongly to Chris Jordan’s speech at Xerocon in Sydney this was the director of tax communications at H&R Block, Mark Chapman.
He said the Commissioner’s vision was confusing, unrealistic and it would be good if he “moderated his language”.
“We're confused because he says that tax agents will be designed out of the system as technology progresses and literally a few seconds later, he says you must understand if your business model is high-volume, low-margin simple tax returns, your business will not be viable in three to five years.
“It's really difficult to see how those two statements can sit side by side within seconds of each other within the same speech. They're absolutely contradictory.
“He's made comments like this before. And I don't understand the reason why. “He knows that a comment like this is basically a challenge to organisations like ours and Etax and ITP and all the rest of the so-called high-volume, low-margin simple return practitioners.
“It simply doesn't hold any water. We're having our strongest year for years. And I don't see any reason for that to change in the foreseeable future. Deductions are not going to be prefilled anytime soon, certainly not in the next three to five years, and that is the main reason why people use tax agents. “There simply isn't any evidence that the Commissioner’s prediction will come to pass.”
The executive director of the Institute of Certified Bookkeepers, Matthew Addison, agreed that it Mr Jordan’s future was some way off, with significant developments in businesses processes needed before it was feasible.
“Concepts of real time GST and thoughts of moves towards a BAS-free future raise concerns of the amount of change and small business capacity and willingness to embrace such a world,” he said.
But others were firmly in agreement. Andrew Van De Beek of Victorian practice Illumin8 said on Twitter: “High-volume, low-margin tax returns will not viable in 3-5 years – Chris Jordan saying it as it is.”
Another in agreement was Tim Munro, founder of Change GPS and CEO of Change Accountants & Advisors.
“The ATO and other people that use data can very quickly put together tax returns for individuals, and very soon for businesses,” he said. “And it's an absolute waste of time for accountants to be doing that work when the data matching can do it automatically.”
He acknowledged that many in the profession would disagree, but felt it was a great thing for accountants.
“Accountants are the best people to help the mums and dads of Australia be better off,” he said.
“We understand what's going on in their lives, we know what our clients want to do. We should be helping them to be doing better things.
“Accountants can spearhead helping clients make their businesses more valuable so they've got more money in the future when they don't want to work as much. But if they're just focusing on tax returns and GST, they're never going to have the time to do this.
“So this could actually kickstart the industry into making certain that accountants are much more valuable in timely advice for the clients.”
However he recognised that bookkeepers who failed to move into advisory would be “irrelevant” on this vision.
One bookkeeper, Michele Grisdale of Rainforest Bookkeeping in NSW, found comfort in Mr Jordan’s comments that “we’re not going to be ruled out, with apps and advisers working together to support small businesses”.
She said the Commissioner’s realisation that her profession was vital to the digital future – and had been crucial during the pandemic – were other positives.
“It was great to see that he’s recognising the roles that small business advisers play on the rollout of digitisation,” she said. “It was nice to see the recognition that JobKeeper actually helped through COVID.”
The CEO of the Council of Small Business Organisations of Australia, Alexi Boyd, was also positive on Twitter.
“Great to hear Chris Jordan … speak about the importance of leveraging natural systems with their work to support #smallbiz,” she commented. “Trusted advisers are crucial as we move to sustainable digitisation.”
The chief compliance officer of 5ways Group in Melbourne, Paul Meissner, believed that predictions of apocalypse for the industry were in any case overblown with “probably less than 100 businesses out of the 70,000 tax agents that exist” actually threatened.
He said that the Commissioner’s prediction about high-volume businesses being unviable had detracted from important points in the speech.
“You need to disassociate the concept of digital lodgement from preparation,” he said. “The preparation of the data, so that it is in a form good enough or correct enough to correctly submit tax documents, is where all of the work is and where all of the skill is, and where all of the professional service is.”
He said the real impact of digitisation would be to increase compliance work for the accounting industry.
“While the lodgement might be one-button, digital, and might ‘just happen’ … what you're doing is instead of the calculation and collection of three different types of tax, what you're doing is splitting them out to potentially different reporting times, which has already been seen with Single Touch Payroll.
“So instead of creating a once-a-quarter catch-up … you're creating multiple points in which you need to adjust the data so that it's tax ready.
“The work involved in getting the data into the correct format – so it's correct in its tax treatment – is unchanged, and has been unchanged in the tax profession for years and years.”
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