Internal CGT education first step for accountants, tax specialist says

Given the complexity of the new regime, the ongoing changes and tweaks to the policy, and the fact that some of the items have not yet been legislated, Mihalic told a recent Accountants Daily live stream that accounting practice principals need to begin by educating themselves and their team to ensure they understand the laws before advising their clients.

“Understand the rules to the absolute best of your ability and how they are going to generally impact your clients before your clients call,” she said.

Then accountants need to determine whether to send bulk communication to their entire client base or provide guidance to individual clients.

“I was getting emails on budget night from clients [asking me] how this was going to impact them,” Mihalic recalled, and added that some clients had recently commenced their sale process.

“At Business Depot, we initially went quite broad and gave our clients high-level general advice any time we had new information. I suggest that that’s a good starting point because right now we can’t do heaps on an individual [client] basis,” she said.

After that, accountants could spend time analysing their data to see what assets their clients own and identify who may be selling their business or other assets. Filtering out these clients could help accountants prioritise client needs and subsequently contact them to provide individual, tailored advice, Mihalic suggested.

Managing client expectations around timeframes and when accountants will respond to their queries is also critical, particularly when tax time rolls around, she said.

“Sticking your head in the sand and pretending it’s not happening is the worst thing that you can do. At least communicating proactively lets your clients know that you’re on it.”

The government has faced criticism from the accounting profession not only for the tax reforms announced in this year’s federal budget but also for subsequent tranches of draft legislation and insufficient consultation periods.

Grant Thornton national head of technical tax, David Montani, said in the same live stream that unintended consequences and anomalies that have emerged following these announcements are unprecedented.

“You probably have to go back quite a long way [since] the last time we had really significant change. This is not the way it normally happens,” Montani said.

While acknowledging the challenges accountants face in grasping all the tax changes, Montani said it offered an opportunity to provide a high-value service to clients.

As clients consider critical decisions around CGT, negative gearing, the 30 per cent minimum tax on discretionary trusts, and a range of other tax issues, accountants could reassure clients that they are available to provide information and guidance to help them make informed decisions, Montani said.

“Ultimately, there’s a service offering there for clients.”