When the mild go wild or, to put it more specifically, when accountants threaten civil disobedience, the Federal Government should take note. That should be basic.
Given the next election is more than two years off and Peter Costello is out and about parading his "man of the people" credentials in the bush, a serious walk for the Treasurer around the accounting precincts might not only help our bean-counter buddies but also the entire economy. Before weighing up the seriousness of the recent insurrection by accountants, let's get the facts. The Institute of Chartered Accountants in Australia (ICAA) is at the end of its tether and has placed a deadline on the Australian Tax Office to re-design the Business Activity Statement and, in effect, the collection system attached to the GST and the New Tax System. What this means is that the accountants have promised to abandon electronic lodgement from October 28, which would swamp the ATO with paperwork. This is an enormous bell these guys are ringing and they are hoping that it does not fall on deaf ears. Especially they hope that Tax Commissioner Michael Carmody's hearing is well and truly working.
What will an electronic go-slow mean? If it happens, the ATO will have to manually feed into its very electronic system all the data from the complex paperwork sent in by accountants. What the ICAA wants to do is to make the tax office take the medicine it has been doling out to them. "The basis of the action would be to do what the ATO currently does to tax practitioners, insisting that any queries be put in writing," says ICAA CEO Stephen Harrison. Harrison told me that one of his members says his office is like The Sound Of Music with all of his accountants putting their telephones on speakerphone and listening to "on hold" music while waiting for the ATO to answer queries. One accountant, who runs a big firm, said he was 40 days behind and was off to the tax office to put a business plan to it to complete his lodgements. But, despite the fact he has put on 15 new staff members, he still doubts whether he could complete his work. Frustration and anger is taking over the profession, with the ICAA recently delivering a protest package that was delivered in Sydney to the offices of the ATO and also to the office of Senator Helen Coonan.
The package carried over 300 complaints – letters, e-mails and surveys – from unhappy accountants. These were supported by hundreds of other members who raised the issue at ICAA regional meetings. The bottom line plea was simple – the ATO had to overhaul and re-engineer the New Tax System administration. Simple? Well, Stephen Harrison said he could produce a team of accountants who know the New Tax System and could design a more simple, user-friendly BAS and collection system. That's the simple bit. The complex part is how to cope with the political fallout of having to admit that a better system is needed. That's not simple but leadership is needed here. It's an old joke that an accountant leading other accountants over a burning issue is like the bland leading the bland – but this is a big issue for Australian business and thankfully our bookkeeping friends have taken up the good fight. My accounting mate, who is pulling his hair out, said the big problem for him is that his clients do not want to do their own BAS. "They're busy running their businesses and they want me to do it," he says. "Michael Carmody wants business owners to do their own BAS but my clients find it complex and simply don't want to think about it."
From the outset, the BAS form was designed for two purposes. Firstly, to get the right amount of money in, and secondly to get the right amount of information into the tax office. It was a noble goal and was a great case of public servants efficiently going about their business. But this is a job done too well and it has ignored the practicalities of the real world. This, historically, has been a problem for civil services right around the world – the television program Yes Minister is testimony to this claim. On an economic front, this enormous diversion is not just a productivity issue for the accountancy profession but also hits us – their clients – hard. Before the arrival of the GST, accountants had set their sights on becoming business advisers. I actually went to one accountant who used to write in magazines about the new age accountants as advisers. In three years of doing business with him, it was all compliance and no real advice. He lost the business, I lost opportunities and the economy lost production, income and employment opportunities.
And that's why this whinge by accountants cannot be ignored. Tax reform was meant to raise efficiency – but currently it is a millstone around the necks of accountants and their clients.
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