Standard Business Reporting: 10 Must-knows
A new role for Standard Business Reporting (SBR) is finally on the horizon. Since about 2009, it’s been hailed as the ultimate red-tape slashing innovation for Australian business. Though take-up has generally been low and slower than elsewhere in the world, it’s starting to become mandatory for all businesses this year. And as government and business talk about expanding its role, its moment seems to have finally arrived.
Here are ten things you need to know about where it stands in Australia right now.
1. It’s already compulsory
From the beginning of this financial year lodging superannuation data electronically via SuperStream is now required for all businesses with more than 20 employees. They had until June 30, 2015 to meet the requirements. Small business will have an extra year to become compliant.
2. There’s a long way to go
3.2 million superannuation compliance transactions were completed using standard business reporting (SBR) software last year. Which is a lot, but remember – about 100 million such transactions happen every year for superannuation alone.
3. Many accountants are still manual
About 40 per cent of the business market has SBR software. But Graeme Colley from the SMSF Professionals’ association last year estimated between 30 and 40 per cent of funds were still using spreadsheets to run their member compliance , potentially exposing them to difficulty when the law changes.
4. SBR saves a lot of time…
SBR links information from a client’s accounts directly to your ledger. This cuts down on manually entering data and the time-consuming process of double-checking it. How much can this shave off your business? A pilot study by Deloitte found standard business reporting software (SBR) cut the time taken to fill out a tax return by 80 per cent.
5. … and money (or income)
The Australian treasury puts the potential savings of SBR when fully realised at about $800 million each year. Much of that could come from fees for compliance work, which highlights the need for accountants to branch out into new lines of business. But the Institue of Public Accountants, while acknowledging SBR as a time and money saver, disputes that it will lead to accountants being sidelined. “You still need someone to make sure the business complies with tax laws, and there will still be all of those opportunities for accountants,” Tony Greco, its senior tax adviser said.
6. The Tax Office thinks it’s the future.
Outlining his vision for 2020, the ATO’s assistant commissioner Geoff Leeper recently said they were working with a future where people were “liberated” of the need to interact with the tax office at all. “Through the use of business software [… businesses] will automatically generate the data needed to meet business tax obligations,” he said.
7. It’s already a global standard
Accounts differ about where the push for SBR began. Some date it to 2004 in China, others say the push began in the Netherlands around the same time. But it’s clear that it’s become a global standard in a very short time. Use of SBR is mandatory in the UK, Singapore and America for reporting to corporate regulators.
8. Some businesses are using it voluntarily
The ATO, APRA and ASIC – Australia’s big three regulators – have recently standardised their approach to SBR. They’ve come up with the SBR 2.1 standard. Even though only the ATO mandates using SBR, other companies, such as Suncorp, voluntarily file reports with regulators in SBR format because they believe it makes the process more efficient.
9. But take-up is still low…
The government appears to have fallen well short of a plan to put SBR in the hand of 100,000 accountants and 2 million businesses by the end of 2014. The Institute of Chartered Accountants says few, if any, of the 27,000 companies required to file returns to ASIC are doing so electronically. But they also argue that’s been the experience with uptake of SBR worldwide: so long as the government does not make it compulsory, most businesses are unlikely to move first.
10. Industry bodies back it to go further
The federal Treasury is looking at a plan to make the adoption of SBR compulsory for a much wider range of financial reporting. Both CPA Australia and Institute of Chartered Accountants in Australia (ICAA) have backed the idea of extending SBR and making it mandatory for all financial reports be filed in computer language for all ASX-listed companies.
To find out more about the latest trends and how Standard Business Reporting software is changing the face of accountancy see our free e-book Beyond compliance: Five trends changing the world of accountancy.
Please note that this article is intended for general information only and is not legal advice. You should seek professional advice suitable to your own circumstances.