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Industry concerns that demand for income tax services is declining means accounting firms need to expand their offerings or risk “slowly disappearing”, according to one mid-tier firm.
Due to the ATO providing new services and the ability of clients to “do [tax] themselves”, income tax services are declining and accounting firms need to focus on offering broader services, such as financial planning, if they want to stay relevant, director of P&L Accounting Hagar Lipa says.
“People have become more educated to do [tax] by themselves and I can compare it to the economic side ... people cannot afford to [pay accountants for tax] so they are trying, even if they don’t have the knowledge, they will do it by themselves, [whether] it’s accurate or not, they need to save the payments,” Ms Lipa said.
“I can tell you in my firm that we are now starting to understand [that] income tax ... those kind of services will not give us a huge profit there.”
Ms Lipa said accountants should ask more questions to better understand their clients’ broader financial goals.
Asking more questions would open up opportunities to provide a greater number of services to clients.
“We are trying now to sit with our clients and to combine the coaching and the financial target of each one of the clients, on top of the tax return. We are not sitting there taking their information on what to claim or how much tax you can get. We more focus on how to achieve your target. We are looking for the solution for your individual situation,” she said.
“When we are sitting with [the client] we understand what they have in their super or if they want to buy a property, so it’s combined between doing their individual tax return and financial planning. So I think now in this world, this is what clients are looking now for.”
Ms Lipa said accountants must expand their services or consider merging with other financial companies, if they want to meet their clients’ needs and stay in the market.
“If this is your only focus, accounting or tax return, you will disappear slowly, slowly ... you won’t be in the market.
“Clients are not looking for just the accountant now, they’re looking for these [broader] services.”