Top 5 regulation and legislation changes accountants need to know about
Staying on top of legislations and regulations is pivotal for any accountant looking to succeed in today’s rapidly moving world. In today’s post, we identify five pieces of regulation and legislation either scheduled to change in coming months, or where change is anticipated at some point in the near future, and outline what they mean for you and your business.
1. The end of the accountants’ ‘exemption’
Under the current regulations, accountants are able to provide advice on self-managed superannuation without a financial advisers’ licence. By the end of the next financial year that will all change.
From July 1 2016, accountants will need a licence to continue advising their clients in some key areas, not just superannuation products but also life insurance, securities, deposit products and managed investment schemes of some classes.
This is a necessity for accountants who want to move into work that extends beyond compliance advice and into broader financial advice. There’s ample evidence from observers that the industry remains unprepared for the new regime. And according to CPA Australia it takes up to 18 months to become prepared. There are plenty of online resources to help guide you through the new accreditation process.
2. The SMSF crackdown
This regulation actually passed last year. But its change on the market is only like to unfold in the coming months.
From July, the ATO has been given new powers to police breaches of super regulation. Trustees of self-managed super funds (SMSF) are well and truly in the taxman’s sights. Technical breaches are now punishable by fines up to $10,200 for those who release assets too early, fail to prepare financial statements, or break contribution rules.
This is a significant change. Until now, these comparatively minor breaches of the law have gone largely unpunished. There’s been no instrument for regulators to enforce compliance, short of deeming an entire SMSF non-compliant – a punishment only fit for the most serious infractions.
The ATO also has auditors in its sights, specifically the “low cost and high volume” providers who they think may be failing in their duty to their clients.
What does this mean for your business? Probably not much, for your processes. Reputable businesses won’t need to change. But it is a significant marketing opportunity. The SMSF sector is growing fast, at 30 per cent over the last five years, especially as the population ages. News of new penalties will have many trustees reconsidering the quality of their advice and potentially looking for new accountants.
3. Company tax cuts
Good news for businesses. From July 1, 2015 the federal government will make good on its election promise to cut the company tax rate by 1.5 percentage points. About 750,000 Australian businesses are expected to benefit, as their taxation rate falls from 30 to 28.5 per cent. The government is banking on this being good news for the economy.
4. Changes to 7A tax treatment.
Will they or won’t they? For the better part of two decades the federal government has been criticised for presiding over ‘7A’ laws on company trusts that are ineffective.
The rules govern the way small businesses are taxed for using trusts. Its application is said to be widespread and affecting up to 700,000 business and personal clients nationally.
Those criticisms have been growing louder recently. Last year the tax board issued a 100-page reform paper that described the thicket of regulation as ‘ineffectual’ in its aim to stop money being taken out of companies and given to shareholders without taxation. The board called for a rewrite to make the law more transparent. How quickly that will happen remains to be seen. But the changes proposed by the tax board have broad industry support.
The way every business conducts its superannuation transactions is about to change, by law. It’s difficult to overstate how widely these changes apply. About 100 million super transactions are conducted in the country each year. It may surprise you to learn that many are still lodged by post, on cheques, or according to a multitude of individual funds’ idiosyncratic lodgement forms.
That’s about to change. Businesses will have to lodge their super transactions electronically and according to a standardised formats. Large companies have from July 1 2015 to comply. Small businesses, or those with fewer than 20 employees, get an extra year’s grace.
These 5 changes are only a snapshot of what you can expect over the next 12 months, with technology evolving, trends catching on and regulations changing, there is a lot to keep up with.
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.