Holes surfacing in tax knowledge amid changes

As the nature of transacting continues to evolve and new rules relating to cross-border transactions, in particular, begin to surface, a number of firms nationwide are struggling with advice worth “big dollars”, according to a winner at this year’s Australian Accounting Awards.

Industry-wide, accountants are struggling with the spate of legislative changes that were announced in and since this year’s federal budget – but are yet to be locked in.

“There’s still a lot of uncertainty about lots of things, and it’s really hard for accountants to do their jobs properly when they don’t know what the law of the day is,” Michael Carruthers, tax director at Knowledge Shop and chairman of Hayes Knight Tax Committee, told AccountantsDaily.

“For example, there were a bunch of announcements around changes to the small business entity thresholds. The start date would’ve been 1 July, but we’re still not sure if it’s going to happen or not. When you’re talking about a change that significant, it does create a level of uncertainty, and makes accountants uncomfortable when making recommendations,” he said.

As the nature of transacting evolves significantly to include international agreements and communications, accountants are becoming involved in a spate of issues they may not have dealt with or given advice on in the past.

Mr Carruthers believes this is affecting “a number of firms around the country” that are not skilled up or familiar with the relevant new tax laws.

“An example is the GST changes came through on October 1 that apply to certain cross-border transactions. If more and more clients are dealing with cross-border transactions, there’s a greater exposure to rules that are incredibly complex,” he said.

“Another area that tends to cause confusion is the capital gains tax systems – it’s one of those things that you don’t have to look into in detail every single day, but when it comes up often big dollars are involved.

“Our experience tells us that when accountants start to come across those types of issues, one-off transactions, complexity arises. Accountants are going to have to get used to the fact that they’ll have to deal with these issues on a more regular basis.”

He believes that as the nature of business and client dealings become increasing global and more complex, this education gap will persist as an issue and potentially grow in the accounting space.

 

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