Labor, Elections & Tax Agent Fees

Nationwide Bookkeeping & Accountants Services

Today, Accountant’s Daily posted an article referring to Labor’s costings and its plans to introduce a cap to $3,000 on Tax Agents Fees for individuals. Businesses with less than $2,000,000 revenue would be excluded – but this means businesses with a turnover of more than $2,000,000 would not be.

We have an opinion on this as we assist accountants in preparing financial statements and income tax returns for both individuals and businesses.

Most individuals income tax return fees are usually less than $500.00 per I return. This can include deductions, rental property schedules but not necessarily capital gains schedules as there is a fair amount of work that goes into tracking the buys and sells of shares and determining best application of the CGT concessions et al. Individuals generally speaking, will actually be okay and if they are “basic” I returns, then they generally pay around $220.00 per return. Each firm charges differently of course.

Business with less than $2 million turnover – well, from my experience, if the books are kept in order with minimal adjustments on the ledgers, GST and payroll, then they too often pay less than $3,000 per financial year. Now if they require proactive accounting services, not just the once a year compliance, then perhaps they will be paying around $3,000 – but again, every firm charges differently.

Business with a turnover of more than $2 million, then yes, they will definitely be affected. More often than not, it will take more than a day to review the accounts to ensure they are accurately representing the business’s financial position, to ensure GST is reported correctly and to then prepare the financial statements and income tax return. These types of clients also tend to require the proactive accountant to assist with strategies throughout the year. So unless they have an in-house accountant on the payroll (which some do), we would expect that these types businesses would be paying in excess of $5,000 per year. And, in my experience this is a fair price.

Accountants (and BAS Agents) are required by law to be compliant and to ensure our clients are compliant which requires time, education, skill and experience. It is the government who requires this of us, so to limit the fees the clients can claim as a deduction means that the business may not want to pay a fair price for the years of experience, training and knowledge in law we need to maintain and if accountants limit their time to the cap of $3,000 per set of financial statements and income tax returns, then the work will lose its quality and in turn, may not be compliant. The other side of that coin though, the clients may still pay the fees above the $3,000 cap, although not fully claimable but the average income of the accountants may go down as not all will want to pay the fees and demand that they stick to the limit – which again, leads to poor quality – OR, offshoring services as Australian cost of wages and living is much higher than say that of the Philippines. Personally, I’d rather ensure I pay Australians so that we can all continue to live and work in the Australian economy.

It’s funny, I worked with a client for a few years whose previous accountant retired and gave the work to us (GJ North & Associates). The previous accountant charged around $8,000 per year. My first year with that client, I charged $4,000 including finding where the formulas and data were incorrect / inconsistent as the numbers just did not add up. So unless that accountant charged double our hourly rate [which I know he didn’t], I didn’t (and still don’t) understand how he could charge them so much. Yes, they were utilising a manual system because they had a large industry specific system that was for internal use so utilised a manual system just to track the figures for BAS / EoFY accounting, but our fees and the previous accountants fees just did not compare and it’s not as though the quality was much different. I find this intriguing. However, soon after we completed the first year’s work, we moved them on to a proper accounting/bookkeeping system to reduce inconsistencies in the manual figures after explaining the issues we came up against, this made a lot easier the next year and the fee was lower again.

Moral of the story? Not all accountants are the same, we don’t all charge the same, but we all do feel that capping the fees for individuals and mainly businesses of turnover greater than $2 million is unjust. They have worked to earn this, their accounts require the due diligence and care to ensure quality and accuracy (all clients, not just these) and when there is a lot of data to review, it takes time and time will vary from job to job, as will the fees. To cap it will under-value our experience, our education, our knowledge in law and in turn will have business owners of all sizes devaluing the skills and knowledge we’ve acquired to make sure that they are compliant with the law and we struggle with this on a daily basis as it is, so it will only be perpetuated.

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