Accountants must move past spreadsheets amid budget changes

Kawar divided the new CGT rules into three buckets. The first bucket covers properties bought before the budget date of 12 May 2026. The second bucket includes newly-built properties purchased after this date, while the third bucket is for existing properties purchased after the budget.

“That is why this budget is very technical, very important, and it is far, far more elaborate with the changes,” Kawar said.

Out with the old, in with the new

As such, Kawar said, continuing to rely on spreadsheets to carry out calculations for clients presents a significant risk for both clients and accountants for several reasons.

For example, new builds could require investors and their accountants to run two complete CGT calculations, one using the 50 per cent CGT discount method and another using the indexation method, to determine which produces the better tax outcome. Kawar noted that there is no simple shortcut to this process.

First, a typical house-and-land package can involve multiple cost components incurred at different times.

These may include the land purchase price, stamp duty and other acquisition costs, progress payments for each stage of construction, and final works such as landscaping, driveways and other finishing costs.

Because each cost is incurred on a different date, each item may need to be separately tracked and indexed from the time it was incurred.

Second, additional capital expenditure can continue to accumulate over the life of the property, even where it began as a new build.

A major renovation, extension or the addition of a granny flat five or 10 years after settlement would effectively start its own separate indexation period.

This adds another layer of calculation on top of the original purchase and construction costs, regardless of which method the investor ultimately chooses.

Importantly, the same property type could favour the discount over 10 years and the indexation over 25 years, Kawar said.

“Nothing about the rule changes, only the numbers,” he said.

“A spreadsheet can’t handle numbers that shift with every extra year, every CPI update, and every new cost. It only ever shows the answer as it stood the day someone last updated it.”

Moreover, it could be difficult to track any mistake, like a wrong date on one cost, and this could throw off the total and lead the accountant to provide incorrect advice, which could lead to the ATO asking questions.

“You have a different line you need to capture by the date and the amount,” Kawar said.

“The total amount is no longer enough. Then you have got different calculations (CGT valuation method versus ATO default method) to compare with.”

While a spreadsheet might be feasible for one or two properties, the complexity increases when there are multiple properties for several clients, Kawar said.

Clients might provide inaccurate information to the accountant, or they might fail to provide the information in a timely manner without multiple email requests, he said.

“Clients have to capture every cost. They have to provide supporting documents for every cost. Then you have to have a folder which gives the right nomenclature so you can refer and check it back. Just imagine the magnitude of hours and the time it would take. It will become a daunting task.”

“Spreadsheets have their own limitations. You can put the data and the numbers, but you can’t connect the source documents.”

Automate, systemise, track

Kawar suggested that accountants should move to a system that automates the majority of the manual tasks and carries the tracking burden the tax reforms could create so that the data is not sitting with one person or in one place.

Kawar founded The Property Accountant, an all-in-one property accounting platform for accountants and tax practitioners that automatically understands which bucket every property sits in based on when it was bought and what kind of property it is, and applies it across every client file.

The platform tracks costs and applies the right inflation adjustment automatically, and accountants can automatically calculate CGT and income and expenses for negative gearing. It also provides real-time data for property valuations on an ongoing basis.

The system generates a unique email for the client, which they can provide to their property manager. The property manager can send rental summaries automatically.

“If you have paid, say, insurance, land tax, settlement statements, depreciation schedule, we have a bulk upload. You copy your entire files from that folder, put them into the bulk upload, and our system automatically reclassifies and reads everything,” Kawar said.

He urged accountants to use technology and automate tasks as soon as possible as tax policies become increasingly complex.

“The sooner you put this into your practice and the sooner you get your clients accustomed to the new tools, the sooner your life will become easier, and your client's life will become easier.”

To listen to the full podcast episode featuring Siddharth Kawar, click here.