According to Queensland-based accountant and financial services advisor, Paul Barnaby, changes to the SBR technology will see the ATO attach the equivalent of a bar code to each line in a business's general ledger, enabling a two way transfer of data between the individual business and the ATO.
“This will facilitate the filing of BAS and Tax returns, but will inevitably reduce the involvement of accountants and tax agents.”
And, Barnaby also cautions that every general accounting software provider will have to cooperate with the ATO, “or risk competitive disadvantage themselves.”
He says information on the planned changes was given by Second Commissioner for the ATO Geoff Leeper at a recent ATSA (Accountants Technology Showcase Australia) conference in Melbourne. The conference was staged by Smithink 2020, a Sydney-based advisory firm to the accounting industry.
Barnaby also confirms that Second Commissioner Leeper, in response to a question about the risk of revenue losses for accountants from the proposed changes, told the ATSA conference, “At risk is an interesting concept. The majority of the ATO’s ‘Red Tape Strategy’ of $500 million will come from professional fees. This is the ‘digital disruption’ for accountants.”
“With compliance professional fees making up 50% to 70% of most accountancy firms’ revenue, which could be lost due to the ATO’s proposed changes, accountants must act urgently to replace this revenue with other services to their existing clients, or risk seeing revenues and profitability fall as a result,” Barnaby says.
Despite the negative impact of the ATO’s proposed changes on the accounting industry, Barnaby does suggest one solution which he says could help accountancy firms shield themselves from the potential revenue losses.
“By adding revenue from outsourced CFO services, the accounting firm will be insulated from the changes, and clients will benefit from better financial advice."
According to Barnaby, many of Australia’s accounting firms – around 70% - don’t offer advisory services to their clients and only provide assistance with BAS and tax returns.
Barnaby sees a real potential for accounting firms to overcome the potential loss of revenue by offering outsourced CFO services, and urges the industry to go down that track.
And, to back up the warnings about potential revenue losses, and the need for the industry to offer advisory services, Barnaby is assisting PlanGuru to provide information and conduct webinars to accountants, bookkeepers and tax agents, on how to promote and implement additional services to their current and prospective clients.
For more information on CFO services and webinars, click here