Challenges For 2015
There are a number of key challenges facing the accountancy industry in Australia that are going to have significant effects on operations in 2015. Now is the time for accountants to finalise strategies to overcome these challenges.
Which include:
Two years ago Deloitte Chartered Accountants produced a report “Digital Disruption - Short Fuse - Big Bang”. This report predicted that six different industry groups (including accountancy businesses) would encounter 24% to 43% of revenue becoming “disrupted” over time.
“Disruption” doesn’t mean revenue is gone. However, there will need to be new strategies developed by the effected industries (including accountancy) on how to respond to changing market conditions. One of the key recommendations by Deloitte is that businesses (including accountancy) should replenish “revenue streams”. This is a major challenge for accountancy businesses in 2015.
Australian Taxation Red Tape Reduction
At the Australian Technology Showcase for Accountants (ATSA) conference in October 2014, the Second Commissioner of the ATO, Geoff Leeper outlined the ATO’s policy relative to the Standard Business Reporting Strategy (SBR Strategy). Mr Leeper indicated that the ATO had advised the Productivity Commission that the “red tape” saving from the introduction of the SBR Strategy would be $500M a year from 2015/16. (Please note he referred to this as a “red tape saving”).
Mr Leeper further stated that “a lot of this would come from professional fees”. Mr Leeper then said “this is the digital disruption for accountants”. Mr Leeper further stated “this is all going to change the role of accountants beyond compliance. Accountants have to become business advisors rather than tax compliance experts for SMEs”.
Many people believe that the Australian Taxation Office’s estimate of $500M is conservative. When these “red tape reductions” are combined with personal taxation return lodgement changes, the overall effect could well be in the vicinity of $1B per annum.
For firms that have already made the decision to diversify into another range of products these two significant issues will probably not amount to much but for firms which have not yet made a diversification to new services for their clients, which clients have been asking for years in survey after survey, those firms could encounter significant difficulties in the future.
Australian Economy
The Reserve Bank has lowered the official interest rate to 2.25%, the lowest for many years. This is not a decision to assist borrowers but is a reflection on the poor performance of the Australian economy.
The poor performance of the Australian economy when combined with small/medium enterprises looking for more value especially when they are made aware of the “red tape reduction” of accountancy fees by the Australian government, will I believe, lead to more pressure on accountancy services.
Turbulence in Politics – Effects On Business Relationships
It is interesting to have a look at what has been happening in politics in Australia in the last 18 months. Last weekend a government that 3 years ago received an overwhelming mandate in Queensland was defeated at the polls. In Victoria, in October, a first term government was rejected in favour of the opposition.
These elections results highlight that electorates which obviously includes the small business community is becoming tougher to please. There is a severe risk for many accountancy businesses that this turbulence within politics will flow into the relationship between small/medium enterprises and their accountants if accountants are not delivering the type of services that the small/medium enterprise market is expecting in 2015.
Now is the time for developing appropriate strategies that will steer accountancy businesses through these troubled times.
- Digital Disruption
- The Australian Taxation Office’s “Red Tape Reduction”;
- Australian Economy;
- Turbulence in Politics – The Effects on Business Relationships.
Two years ago Deloitte Chartered Accountants produced a report “Digital Disruption - Short Fuse - Big Bang”. This report predicted that six different industry groups (including accountancy businesses) would encounter 24% to 43% of revenue becoming “disrupted” over time.
“Disruption” doesn’t mean revenue is gone. However, there will need to be new strategies developed by the effected industries (including accountancy) on how to respond to changing market conditions. One of the key recommendations by Deloitte is that businesses (including accountancy) should replenish “revenue streams”. This is a major challenge for accountancy businesses in 2015.
Australian Taxation Red Tape Reduction
At the Australian Technology Showcase for Accountants (ATSA) conference in October 2014, the Second Commissioner of the ATO, Geoff Leeper outlined the ATO’s policy relative to the Standard Business Reporting Strategy (SBR Strategy). Mr Leeper indicated that the ATO had advised the Productivity Commission that the “red tape” saving from the introduction of the SBR Strategy would be $500M a year from 2015/16. (Please note he referred to this as a “red tape saving”).
Mr Leeper further stated that “a lot of this would come from professional fees”. Mr Leeper then said “this is the digital disruption for accountants”. Mr Leeper further stated “this is all going to change the role of accountants beyond compliance. Accountants have to become business advisors rather than tax compliance experts for SMEs”.
Many people believe that the Australian Taxation Office’s estimate of $500M is conservative. When these “red tape reductions” are combined with personal taxation return lodgement changes, the overall effect could well be in the vicinity of $1B per annum.
For firms that have already made the decision to diversify into another range of products these two significant issues will probably not amount to much but for firms which have not yet made a diversification to new services for their clients, which clients have been asking for years in survey after survey, those firms could encounter significant difficulties in the future.
Australian Economy
The Reserve Bank has lowered the official interest rate to 2.25%, the lowest for many years. This is not a decision to assist borrowers but is a reflection on the poor performance of the Australian economy.
The poor performance of the Australian economy when combined with small/medium enterprises looking for more value especially when they are made aware of the “red tape reduction” of accountancy fees by the Australian government, will I believe, lead to more pressure on accountancy services.
Turbulence in Politics – Effects On Business Relationships
It is interesting to have a look at what has been happening in politics in Australia in the last 18 months. Last weekend a government that 3 years ago received an overwhelming mandate in Queensland was defeated at the polls. In Victoria, in October, a first term government was rejected in favour of the opposition.
These elections results highlight that electorates which obviously includes the small business community is becoming tougher to please. There is a severe risk for many accountancy businesses that this turbulence within politics will flow into the relationship between small/medium enterprises and their accountants if accountants are not delivering the type of services that the small/medium enterprise market is expecting in 2015.
Now is the time for developing appropriate strategies that will steer accountancy businesses through these troubled times.
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