Tax accounting is critical for any business. Not only is it a moral obligation, but it is also a legal requirement for a company to pay taxes. Therefore, if companies fail to file tax returns, do so late, or fail to report the correct figures, they open themselves up for hefty fines and audits. It means that tax accountants must be on top of their game to ensure that clients do not suffer the consequences. However, they can only do it by staying updated with and understanding emerging tax accounting challenges. This article highlights the current challenges facing tax accountants.
Commoditisation of Tax Accounting Services
Automation has become part of the tax accounting profession thanks to its convenience. Today, businesses can buy accounting software from an online vendor and start using it immediately for tax accounting purposes. Although automation in tax accounting is a step in the right direction, it has led to the commodification of accounting services. Today, most businesses only see tax accounting services as a cost and choose the least expensive option. The best thing tax accountants can do to stop the issue is to position themselves as trusted advisors for clients. However, it is only possible if accountants embrace technology and use the free time to offer advisory and consulting services, which add value to customers.
Incorporating Data Analytics
Tax accountants use financial data to help clients make better decisions regarding tax savings and analysis of tax issues. However, tax accountants today have access to an unprecedentedly large amount of data from different sources. Analysing and leveraging the information requires skills in data analytics. Unfortunately, tax accountants are not trained in data analytics, while some believe that the field does not fall in their purview. Rather than rely on the technical expertise gained through training and experience, tax accountants should try hard to acquire predictive/prescriptive data analytics skills. It equips accountants with the ability to analyse large data sets for clients and improve decision-making.
Growing Work-Related Expenses Gap
The Australian Taxation Office (ATO) permits businesses to file claims on work-related expenses. Unfortunately, the ATO believes there is a problem in the area since companies are overclaiming. For instance, businesses claimed approximately A$7.9 billion in work-related expenses in 2017. In fact, the figure is higher than the corporate tax gap in Australia, and therein lies the issue for tax accountants. The reason is that the ATO investigates tax accountants when client over claim. Thus, tax accountants need to be alert when preparing tax reports and confirm that clients incurred expenses being claimed.
For more information, contact a tax accountant.Share