The Inspector-General of Taxation’s review into the Future of the Tax Profession has found that, while tax practitioners continue to play an important role in the tax system, advancements in technology may require practitioners to change their business models.
“As technology advances, a range of categories of work currently undertaken by tax practitioners [is] likely to be disrupted,” the report said.
“It is important to acknowledge that service models based on simple compliance activities will increasingly be substituted by technology — this is already well advanced in many jurisdictions.
“The key for tax practitioners will be to apply technology in a manner which augments their practice and tailors services to the needs of their clients.”
The tax watchdog believes that with client expectations moving towards convenience, demand for a one-stop shop business that provides a broad range of services, including financial advice, could be the way forward for the industry.
“While developing such expertise may prove challenging for many in the short term, the use of client referral programs or mergers with locally based or overseas practices may assist to provide tax practitioners with increased access to resources, knowledge, drive synergies and enable greater innovation,” the IGT said.
Further, with the rise of the gig economy, the IGT believes practitioners will have to shift to a more flexible client engagement model, similar to those employed in the mortgage broking and financial planning space.
“For example, rather than requiring key clients to come into existing offices, making opportunities available to visit those businesses to understand and observe their operations and offering more tailored advice and services,” the IGT report said.
“When coupled with developments in cloud technology, real-time capture of transactional data through platforms such as the NPP and sophisticated machine learning capabilities to consolidate and analyse significant amounts of data, tax practitioners in the future are very likely to be able to expand their service offerings beyond current resource and geographical constraints.”
While the IGT has recommended that the ATO consults with recognised professional associations to offer assistance to tax practitioners to “transition from the current to future states”, the Tax Office has disagreed, noting that it cannot be directly involved with the practitioner in managing their business or their practice beyond providing general information and support for its services and products.