As always, there have been many changes affecting the accounting space in the last 12 months. So how will these trends continue to evolve and affect accountants nationwide in the 2015-16 financial year?
With the start of a new financial year, Australian accountants are looking to the future to see what trends and changes will shape the sector in the coming months. Here are some key trends that will impact Australian accountants and their clients as the market evolves.
One of the biggest changes affecting your clients this year will be investments.
With APRA cracking down on the major banks in a series of moves to reign in their lending to property investors, in a bid to cool Sydney’s property market, many people looking to make investments will be casting their eyes over alternate asset classes, or potentially borrowing funds at a higher interest rate in order to purchase property.
In turn, this will likely place more emphasis on accountants to minimise tax rates through negative gearing, answer more questions about CGT and taxable offsets on various investment types, and respond to an increasing number of requests for financial advice.
The recent share market rout in China, which wiped roughly one-third off the value of shares on China’s mainland, has sparked debate about Australia’s preparedness to deal with a future GFC-style slowdown.
At a macro level, the big banks are being forced to boost their capital reserves to cover them for a rainy day. On the ground, however, SMEs may begin questioning the soundness of expanding their operations into or through China, particularly if economic instability persists there.
Currency risk mitigation is another of the important factors for businesses trading overseas, particularly with the Australian dollar’s significant falls against most major currencies in the first half of 2015. With the US and UK central banks mulling over the prospect of hiking their official interest rates, compared with the RBA maintaining an easing bias, our dollar is likely to see continued downward pressure throughout this financial year.
Forecasting unemployment rates is far from an exact science, yet that doesn’t stop many economists and statisticians from trying.
However, it’s arguably the definition of employment, as opposed to the volume of people employed, which will be most important to the accounting profession.
The definition of what constitutes income is changing as the ATO seeks to capture income earned in the shared economy. Revenue streams from services such as Uber and Airbnb are in the firing line, meaning accountants may be assessing higher levels of overall income and calculating an increasingly diverse set of related deductions.
Of course SME tax deductions have again entered the spotlight after federal Treasurer Joe Hockey, in the budget announcement in May, outlined raising the tax offset threshold to $20,000 on equipment purchases, as well as removal of the restriction on depreciation on only one mobile electronic device, and changes to deductions for primary producers.
Many SME operators, farmers and individuals may since have forgotten or not be aware of this extension, meaning it falls to accountants to educate clients about the increased deductions available to them.
It’s a time of continual change for the accounting sector, and accountants will need to stay abreast of rapidly changing economic dynamics – both domestic and international – in order to best service their clients’ needs.
By embracing their role as a trusted business adviser instead of merely a bean counter come tax time, accountants can deliver a significant positive impact on the bottom line of their clients’ business.