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December 15, 2015

Australian accountants face PM’s idea boom

By Franchesca Hashemi

Australia’s fourth prime minister since 2013 Malcolm Turnbull has promised AUS$1.1bn to unleash an "ideas boom" that will make Australia an "innovation nation".

Launching his first big economic policy in Canberra on 6th December 2015, Turnbull laid out a science and innovation agenda that will create "the modern, dynamic 21st century economy Australia needs".

Nearly half of the billion dollar investment has been pledged to science-related infrastructures, while tax breaks target early stage start up businesses, including a 20% non-refundable tax offset and exemptions from capital gains tax.

There will also be changes to national insolvency laws so the default bankruptcy timeframe is cut from three years to one.

"There is no doubt Mr Turnbull is riding on a wave of popularity at the moment and confidence has returned to the business environment", chairman of Nexia Australia Ian Stone says.

However, there has been an increasing groundswell for a complete tax overhaul within the national business, Stone continues.

Yet Stone is mindful that with only less than 12 months to the next election only "a very brave PM" would make drastic tax changes.

In terms of regulation, accountants will need an Australian Financial Services License (AFSL) by July 2016 to provide financial advice on Self-Managed Superannuation Funds (SMSFs).

Previously, the so-called ‘accountants exemption’ allowed certified accountants to advise clients on non-product strategic financial advice, including SMSFs.

Interestingly, however, a survey by Australian investment and trustee group Perpetual Pilot found that 72% of accountants have not submitted a SMSF application or even made a decision about how to approach the upcoming change to licensing rules.

Industry Super Australia, a national superfund body, estimates there are 1000 SMSFs with more than AUS$10 million, and nearly 40,000 with at least $2 million, proving it is a popular product for the financiers to provide information.

According to managing partner of UHY Haines Norton, Sydney Michael Coughtrey firms of all sizes will be impacted by changes to the accountants’ exemption.

"Most of our partners now have to complete between four and eight fully days of training just, in most cases, to continue to do what we have in fact been doing for our clients for many, many years," he says.

Coughtrey estimates the cost his firm will incur from obtaining new licenses for accountants at over AUS$40,000, a steep fee for what he says was covered previously under pre-existing accounting and tax qualifications.

Nonetheless Coughtrey is optimistic that 2016 will bring continual opportunities for new clients in a firm of his size, particularly in tax advisory and audit, regardless of the regulatory changes.

"It is an ever changing professional environment," he concludes. "Digital disruption remains a challenge and we need to constantly keep up with technological advances in the market place, especially in an age where information is readily to hand."

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