The Federal Government is once again looking at the abolition of work related tax deductions. Why? Because there $16 billion annual cost would go a long way to repairing the budget deficit.
Will it happen? Probably not. This has been discussed and debated for at least the last 30 years, and pops up as topic of interest every couple of years. Always, good for a newspaper article or two. Why won’t it happen? – will upset a lot of voters (specially 10 million employees who look forward to their annual tax refund of $2,000 (average)). This means the accountants can sleep easy tonight and not worry about the $1 billion annual tax preparation fees disappearing anytime soon.
What will be keeping accountants up at night is the impact of technology and competition and how its decimating the fees accountants can charge for the preparation of financial statements for clients. Come June 2017 the Xero software will automate the preparation of financial statements (once setup). Of course, the software won’t be perfect and will make mistakes with coding some transactions. Unfortunately for accountants, Xero’s research shows the software makes less mistakes than the average accountant!
For public practice accountants to have a happy and rewarding future they need to be providing their clients with value added services. This includes profit improvement, asset protection, tax planning (see TaxFitness), strategic planning, cashflow management, etc.