Stress test

Appearing on In the Black Digital site, July 2020


Tough times: how to cope with stress

Anyone who has done it knows that running an accounting practice can be a stressful undertaking. But the COVID-19 crisis has taken it to a whole new level, imposing unprecedented levels of financial and psychological pressure. Coping with this type of stress is not easy but with the right attitude and appropriate tools it can be done, and possibly the experience of adversity can provide an even greater level of personal resilience and strength.

An irony is that the clients of accounting practices are increasingly looking to their advisers as a voice of stability, reassurance, and control. While there are no firm figures, anecdotal evidence indicates that many practices have seen revenue drop by 30-40 per cent, or even more. Many CPAs have continued to provide services to clients with reduced or no charges, which will help to build relationships for the long term but puts more strain on the short-term bottom line. In other words, the pressure has gone up while the returns have gone down.

Dr Grant Blashki, Lead Clinical Advisor with Beyond Blue, an organisation dedicated to improving the mental health of Australians, explains that people in business need to consciously maintain their mental well-being.

“The usual common-sense approaches to maintaining mental well-being still apply,” he says. “This involves keeping up regular exercise, eating well, getting enough sleep, creating regular routines and making time for friends and family. “Some particular issues that are important during the pandemic are using  online technologies to stay connected with people who are important to you, and being clear about work and home-life boundaries. Don’t let the problems mount up.”

Stress mgt

Break the cycle

Warning signs that stress is turning into a serious health problem include constant fatigue, low energy and disrupted sleep. Other symptoms include withdrawal from usual engagement with work and friends, a noticeable drop in performance, and obsessing about negative themes. There may be a need for professional help, and there should be a readiness to seek it as required.

For people working from home, it is important to establish a routine, including regular contact with colleagues. There are unhelpful behaviours that should be avoided, such as staying up late and then sleeping in, or some form of substance abuse.

Richard Maloney, author of Stress Free: How to Thrive Under Pressure in Unprecedented Times*, and CEO of Quality Mind Global, a consulting firm specialising in mindfulness in the workplace, recognises the pressures that many accountants are under. He emphasises the importance of allowing yourself to de-stress and re-focus. Meditation is beneficial but simply listening to relaxing music can also be very helpful, as can ‘walking meditation’. The aim is to break the cycle of stress.

“You need to schedule time away from work pressure, to clear the mind and minimise negative thinking patterns,” he says. “Another good idea, if pressure is piling up, is to make a ‘gratitude list’ to shift your focus from your problems to the good things in your life.

“If you feel that stress is pushing you into a conflict mentality, try going for 24 hours without saying anything negative. This will make you conscious of yourself and your feelings.”

Taking the pressure off

Dr Blashki points out that Beyond Blue has designed a website called Heads Up**, which provides useful articles, videos and interviews for people in business. It includes a guide for businesses advisers on how they can maintain their own mental health as well as offer assistance to others.

Despite the difficulties of the current situation there is also the opportunity to deepen client relationships.

“There is so much uncertainty in business right now that clients will be looking for leadership, advice and initiatives from their providers – and more than just numbers,” says Maloney. “It’s okay to extend conversations beyond financial issues, and to ask a client how they are weathering this storm at the psychological level. No-one cares how much you know until they know how much you care.”

A related idea is to run workshops for clients on building mental resilience, and providing resources on mental health as well as business management in tough times. In fact, Maloney believes that helping others is an essential way to reduce one’s own stress.

“If you are more focused on others you are less likely to obsess about your own problems. In the end we are all here to help and serve each other, and we can attain a great sense of accomplishment from doing that,” he says.

Dr Blashki agrees with this theme. “One of the positive outcomes of this pandemic has been a recognition of the fragility of other people’s lives,” he notes. “It has reminded us how dependent we all are on each other. Assisting others, whether with business advice or simply a compassionate ear, can all contribute to a sense of community. That will be greatly appreciated.”


* Stress Free: How to Thrive Under Pressure in Unprecedented Times, Richard Maloney, Woodslane, 2020.

** Go to  See also the Beyond Blue documents Supporting small business owners to improve their mental health and wellbeing at work and Actions for small business owners to improve their mental health and wellbeing, available at


Key points for coping

  • Take regular ‘de-stress’ time, away from work issues
  • Stay connected with family and friends
  • Ensure that work and home-life boundaries are clear
  • Look to available resources on mental health
  • Be aware of warning signs such as fatigue and social withdrawal

Virtual job interviews “the new normal”

Appearing on In The Black Digital site, May 2020


Despite the economic slowdown driven by the COVID-19 crisis, there is still hiring taking place, although social distancing rules and remote working requirements mean that job interviews are increasingly being done through computer screens rather than face-to-face.

“The technology for virtual interviews has been around for some time but prior to the COVID-19 crisis it was not used often, maybe five per cent of the time,” says Matthew Gribble, CPA, Regional Managing Director of recruiting firm Michael Page ANZ. “That has changed radically. They are now the new normal and happen in 99 per cent of cases. And we expect that even after the crisis has passed many organisations will embrace the efficiency gains from using them, especially in the early stages of the assessment process. So knowing how to handle a virtual interview is a skill that anyone looking to move up or move on will need.”

In many ways a virtual interview should be treated like a face-to-face interview: taken seriously, with research and preparation. There are numerous platforms used in virtual interviews, and Gribble nominates Skype, Zoom, Microsoft Teams and Google Hangout as the most popular. They are fairly easy to install and use but checking software compatibility and Internet speed with the interviewing firm are important steps. There are useful tutorials on YouTube and most of the platforms provide a guidance package.Virtual job interview

For first-timers, a rehearsal with a friend in a remote location makes sense. This not only helps to identify any technical issues but can go a long way to ameliorate nervousness. The overall goal is to be able to be unconcerned about the technology so you can focus on the substance of the interview itself.

Home environment

If the interview is conducted from home the interviewee should ensure that there is a quiet, controlled, indoor space, preferably backed by a blank wall. There should be no interruptions from children, pets or neighbours. When speaking, look at the webcam on the computer and not the images of the interviewers. It is better to use a computer than a mobile phone but if a phone is the only option then it should be fixed in position. A hand-held selfie-style image does not say competence and professionalism.

Attire should be essentially the same as would be worn to a face-to-face interview, although it should be noted that stripes, bright colours and complex patterns do not work well on a screen. Most platforms have an option which allows the interviewee to see themselves as they appear to the interviewers, and this should be checked before the interview. Any supporting documents should be provided to the interviewers prior to the interview, and having a hard copy on hand is likely to be useful. You do not want to have to exit the video platform to check documents that you have only in digital form.

A virtual interview provides fewer visual clues than a face-to-face interview so an interviewee should demonstrate their engagement, with some extra nods and signs of agreement. A common problem with video platforms is that there is often a lag of a few seconds, and the interviewee should time their responses accordingly. The degree of lag can be established with a rehearsal, and is not difficult to address once you are aware of it.

Paper for taking notes and even a glass of water should also be available. A final piece of advice is to ensure that the connection is terminated before you relax at the end of the interview.

Interviewer obligations

For interviewers, preparation is also essential to get the best out of the process. Most platforms allow for several interviewers to be involved on a split-screen basis. Familiarity with the technology is as important for interviewers as it is for interviewees. Interviewers should realise that virtual interviews, like face-to-face interviews, are a two-way street, and that they and their company are being assessed as well as the interviewee.

“The chief issues typically come with coordinating the questions,” Gribble notes. “A good briefing is important so that all interviewers are clear on the background of the candidate and their progress through the process so far, as well as the run of play and the questions to be asked.”

Prior to the interview, the interviewee should be informed about the length of the interview, the participants, and the general subjects for discussion. In some cases it might be also necessary to check any differences of time zones.

For both sides, virtual interviews are not difficult but the special characteristics should be understood. Interviewees should realise that just because they are in their home environment does not mean they can be overly casual. Likewise, interviewers should acknowledge that they have obligations to ensure that the process is organised appropriately.


Tools for re-invention

Appearing in ‘Downloadable Resources’ section, In The Black, May 2020


Asian banking

Asia has been the largest regional banking market for over a decade but the pace of growth is now slowing, even as new challenges from digital technology and non-bank players arise. A McKinsey study notes that responses have been mixed, although the leaders are re-inventing themselves by partnering with technology-based firms or, in some cases, establishing digital-only subsidiaries.

The report suggests that the next few years is likely to be a period of consolidation, with smaller players being acquired and greater cross-border competition. The eventual result, however, will be a stronger banking sector underpinned by the increased use of AI and advanced analytics.

Download report from link at:



In a comprehensive submission to the Senate Select Committee on Financial Technology and Regulatory Technology, the Reserve Bank examines a wide range of fintech-related issues. The submission summarises RBA views on the New Payments Platform, Stored Value Facilities Regulation, and Digital Identity. Regarding digital currencies, the RBA says that it does not favour the introduction of a government-backed digital currency for retail use but notes that at some time there may be a role for a wholesale settlement token based on distributed ledger technology. The agency is also monitoring the development of the ‘Libra’ cryptocurrency and the regulatory issues that might result.

Download the report from:



The key challenge for C-suite leaders in coming years will be to align digital technology with changing consumer demands, according to a report from Accenture, We, the Post-Digital People. The report argues that digital technology is evolving from an advantage to a basic expectation, and the roadmap inherited from digital pioneers is no longer useful. To thrive, companies must be able to provide human-focused experiences, with less emphasis on ownership of physical products.

The report also examines the move of robotic capabilities out of the factory into everyday life, and how the spread of AI will require companies to focus on the context of human-machine interactions.

Read at:


Gen Z

People born between 1997 and 2012 – Gen Z, or Zoomers – are now entering the workforce in numbers. They require particular management responses, according to process automation consultancy Nintex. The e-book The Gen Z Effect in Australia and New Zealand draws on survey data to show that Zoomers want to do varied work that provides for personal growth.

As ‘digital natives’, Zoomers are often seen as the office’s tech expert. About 70 per cent of them report being approached to fix a technology problem or recommend a product. However, 43 per cent are concerned that AI will make them redundant or radically change their jobs.

Download e-book from:


Defeating FOBO

The Net era has brought many benefits but a downside is overload of choices. In this useful TED talk, writer Patrick McGinnis (who apparently invented the term Fear Of Missing Out, or FOMO) examines how to make better decisions. FOMO’s dangerous sibling is FOBO, or Fear Of a Better Option, which can easily lead to analysis paralysis. Don’t waste time on matters with no consequences, McGinnis says, and on those with some consequences you should divide them into a series of yes/no questions. High-stakes decisions require research and external input. The key to defeating FOBO is, once the choice is made, to stay with it.

Watch at:


Providing the steady hand

Appearing in INPRACTICE magazine, April 2020


The New Zealand government’s response to the COVID-19 crisis has been swift and determined, legislating a relief package of around NZ$18 billion, equivalent to about six per cent of the country’s GDP. Accountants, working as finance specialists and business advisors, are providing critical support to their SME clients, guiding them through the crisis and ensuring that government support can be accessed.
Saurav Wadhwa, Managing Director of IBBZ Accounting, a practice based in Auckland, believes that providing certainty is essential in a time of stress.
“I see that part of our job is to keep our clients from succumbing to panic,” he says. “We have been taking their calls, providing updates, and trying to give them as much comfort as possible. New businesses, and those that were already struggling, are more concerned than existing businesses. Established businesses are not too worried but that will change if the situation goes on for another six months or so.Saurav Wadhwa
“As for our own business, we are expecting a 30-40 per cent reduction in sales and there has been a marked drop-off in new clients. All our employees are working remotely and everyone’s hours have been reduced to 32 hours as a way of sharing the burden. We had previously invested in the technology to allow remote working and had simplified our processes, and that is now showing the benefits.”
Wadhwa notes that his firm is not charging any professional fees to clients for helping them access government support. Clients have been given extensions of payment terms for other services whenever they have asked.
Bridgette Pretty, Director of the Nelson-based practice Pretty Accounting, likewise acknowledges the crucial aspect of providing reliable information to clients.
“During the first two weeks after the relief package was announced I worked long hours to help clients with information around the subsidy applications. I turned billing off during this time as having access to answers during challenging times can greatly help to reduce stress levels,” she explains. “It’s a way of giving back to clients. And clients have shown remarkable resilience, even those who have been hit very hard.

“It’s important to be here for them, to offer answers and steadiness in a time of stress. That has extended from providing guidance on cashflow planning for the future to developing some coping skills on how not to kill family members during lockdown!”

Accessing support

Bridgette PrettyPretty identifies the wage subsidy as a valuable part of the government support package, allowing businesses to retain valued staff. Assistance has also been important for self-employed people, as it has meant the ability to plan cashflow with the assurance that some money, at least, will be coming in. This part of the support package is fairly easy to access but Pretty’s firm has been there to assist clients with applications and documentation.
Wadhwa agrees that the wage subsidy scheme is one of the most effective government initiatives, and his practice has helped many clients with it. Other aspects of the government support program are more complex, such as the re-introduction of depreciation for non-residential buildings, changes to some tax rules, and the temporary increase in asset write-offs. These usually require professional advice for clients.
Wadhwa is less enthusiastic about the loan scheme. He sees the possibility that some companies will take the loan but then not have the capacity to repay it. But he sees the overall package as very positive in the level of support it has provided.

Recovery phase

Both Pretty and Wadhwa see that the accounting profession will have an important role to play when the economy moves into recovery phase.
“Cashflow planning is going to be a big one, as well as tax planning, which was invaluable in the recovery from the previous recession,” Pretty says. “We will also provide assistance with information to give to client’s banks. That will be important as we come out of lockdown, a means of keeping relationships between clients and the banking sector open.”
She believes that the recovery period will open up new opportunities for many businesses, and is working to ensure that her clients will be in a position to take advantage.
Wadhwa agrees, saying: “Using our expertise to look ahead is one good way we can add value to our clients. We make it part of our regular update service, and we are also providing advice on financial planning and business restructuring.
“Looking ahead a bit further, we will help our clients with disaster recovery plans, which includes contingency funds in the form of liquid cash. For some time I have been working with clients to build contingency funds – nine months of total gross expenses is a good target, in my view, and three months is the absolute minimum. This crisis underlines the value of that.
“As accountants and CPAs, we are our clients’ most trusted source of advice. I believe they need us more than ever before, and we cannot let them down.”

Resources for download

Appearing in In The Black magazine, April 2020


AI AsiaAI’s Asian impact

A comprehensive survey of Asian countries conducted by MIT as part of its Technology Review Insights research program has found that AI will create more winners than losers, but its spread will nevertheless involve a period of significant disruption. Over three-quarters of companies expect total headcount to increase over the next five years, including in functions where AI is already being deployed. However, across the region about 12 per cent of current jobs are at high risk of being automated in the next five years. Labor-constrained markets such as Singapore, Australia and Japan are likely to be among the fastest to seize the opportunities created by AI.

Download from:


Communication innovation

A useful resource for those who want to improve their presentation ability is the site of communications consultants Storytelling With Data. A recent blog looks at innovative ways to communicate complex data in visual form, moving well beyond traditional pie charts and bar graphs. Other blogs discuss the importance of practice, how to get the best from feedback, and trends revealed at recent conferences and events.

The company site offers blogs in written and auditory forms, as well as podcasts with a variety of experts. Given the importance of presentation skills for finance professionals, it is well worth a look.

Read, watch, and listen to at:


Global data

The International Monetary Fund collects a huge amount of economic and financial information, much of it available through its regular World Economic Outlook report, released in April and September/October each year. The report presents the IMF staff’s analysis of economic developments at the global level, in major country groups and in many individual countries.Global data giants: The real insurance disruptors | Latest News ...

However, the WEO report is only one part of the IMF’s research activities. The site also provides links to specialised reports, including the future of global manufacturing and the impact of growing protectionism, policy challenges for emerging economies, and the outcomes of a conference on debt.

Go to:


Staying skilled

In a survey of 951 Australian employers, three-quarters of respondents said that they were more likely to shortlist a qualified candidate who demonstrates a commitment to upskilling and continuous learning, with an emphasis on ‘soft’ rather than technical abilities. A similar figure nominated “communication” as the most important skill, followed by “adaptability”, and then “digital proficiency in a new technology relevant to an individual’s job”. Coding skills were nominated by only six per cent.

Employers are looking for people who can collaborate across the organisation, and who can pivot to a new role or area of responsibility as circumstances change.

Go to:


Integrated reporting

KPMG’s sixth annual survey of corporate reporting trends in Australia has found that 74 per cent of large listed companies are now using integrated reporting to focus on value drivers, up from 48 per cent in 2018. Many large non-listed companies have also turned to integrated reporting. The trend is driven by increasing investor interest, especially from super funds, and changes to the ASX reporting recommendations.

A common thread in the survey interviews was that the process of developing integrated reporting starts to drive integrated thinking within the organisation, and the better use of resources and relationships in strategy execution.

Download from:

Are you ready for AI disruption?

Appearing in In The Black magazine, April 2020


Every leader, manager and finance professional now understands the importance of being able to deal with disruption. The story of the past decade has been about one wave of technology-based disruption following another. The idea of disruption is not new – Clayton Christensen described and defined it in his seminal 1997 book The Innovator’s Dilemma – but the game is now moving up a notch. The transition of Artificial Intelligence from the pages of sci-movies and research labs into the business mainstream represents a new set of fundamental challenges, and many leaders in Australia do not seem ready to deal with them.

“AI has potential impacts similar to other forms of technology-based disruption but it also has additional characteristics that need to be considered separately,” says Dr Mathew Donald FCPA, an academic who consults widely on change management and business strategy. He is also the author of an important new book, Leading and Managing Change in the Age of Disruption and Artificial Intelligence*. “This includes the potential to affect a wide range of work. Managers will need to re-write job descriptions, procedures and responsibilities, while trying to build jobs that are satisfying for staff. They will have to recognise that many people remain wary about AI systems.”

Dr Donald’s experience is that the Australian business community is less prepared for the practical reality of AI than comparable countries. Dr Donald cites the UK, Ireland, India, the US and the EU as further along the AI transformation curve. Many Australian corporates – not all – believe that the rollout of AI is still some way off so have not included it on their risk registers.AI Disruption

AI systems such as ‘phone bots’ are already being used to handle simple interactions with clients but will eventually be able to take on higher-level activities. Dr Donald believes that the finance profession will use AI to review and improve transactional and management information, moving up the complexity ladder.

There is good evidence that some business sectors have already moved solidly into the robotic field. Professor Eduardo Nebot, Director of the Centre for Field Robotics at the University of Sydney, notes that robotic systems are already being used in the mining, stevedoring and agricultural industries. Driverless vehicles such as harvesters are being successfully used, and these robots are increasingly being linked to basic AI systems.

Fast transition

Dr Donald believes that AI will not be a ‘big bang’ but a series of waves that occur over time, first in areas where the work is repetitive and the decision principles are easy to determine. Then it will move into areas such as inventory control, stock locations and customer service. Eventually, virtually every area of a business will be affected in some way by AI.

“The most limiting factor for AI will be consumer acceptance, and it will only be adopted once it can be shown to be superior in function to the human equivalent, as well as reliable and safe,” says Dr Donald. “The transition, when it starts, will be fast. There is a real risk that it may happen too quickly for the ethical issues to be fully considered, understood and mitigated.”

For the accounting profession AI raises a host of challenges. Technology has already had a crucial impact on the traditional functions of recording and reconciliation, and AI is going to drive that even further. While many finance professionals now focus on data analysis and trend insight, these areas would appear to also be open to AI disruption. This is the case for accountants in both corporate roles and public practice.
“The capacity of AI systems to process huge amounts of data means that they can provide analysis, reports and new insights in faster time frames,” Dr Donald notes. “The potential for AI to integrate systems between organisations in new ways has already been demonstrated overseas. In Australia, B2B and B2C systems have been around for a while, especially in the space of warehousing, deliveries and orders. Data connectivity is increasing globally, as seen in the social media and marketing fields.”

Changing role for finance professionals

While there are significant problems there are also many new opportunities for finance professionals. The removal of the routine tasks will allow financial specialists to get closer to business decision-making, providing more of their expert opinions and advice. To take full advantage of this they may have to overhaul their business structures, procedures and skills base, so they can offer up-to-date advice in almost real time.

Dr Donald believes that this is an area where the profession should be taking the initiative in the immediate future, rather than allowing others to establish themselves as experts on the advisory element in AI. The key area of opportunity lies in the potential to provide guidance about the most suitable AI system and its implementation, as well as any bias and ethical issues. This will not necessarily require high-level technical knowledge but will be more about business and strategic advice.

As AI moves squarely into workplaces managers will likely be presented with the task of explaining to staff that their roles have changed or diminished, or even eliminated. Staff, especially those with lower levels of skills, will likely become worried about their future, and managers will have to stretch themselves to provide workplaces that people want to work in. On the other side of the coin, highly skilled people will become more valuable. These people may prefer to work from home, or under new arrangements and for higher pay – and they will be making such demands at the same time that the less skilled are being replaced by AI.

“Managing this period of transition is going to be a real challenge, a balancing act,” says Dr Donald. “And in the longer term there will be even more issues to address. Some employees may have to work for rather than with an AI system, and that is a big psychological shift. Managers will have to work much harder to attract and retain staff in this situation.”

He foresees a new period of re-learning for managers and leaders, so they have a conceptual knowledge of the technology and what it may deliver. The spread of 5G communication will assist also AI development. Faster communication speeds will underpin AI-integrated driverless urban vehicles, drones, and even power generation.

Professor Nebot agrees about the importance of 5G. “The game changer will be if 5G can provide the bandwidth and latencies required to move the computational power outside vehicles,” he says. “But there are a lot of challenges to address before we get to that.”

Dr Donald believes that many businesses are likely to soon be interested in AI-based automatic phone systems for customers or will consider drones, driverless cars or robots to do routine tasks. The challenge for the accountant is to provide the tools to determine if the proposals are worthwhile, and to understand the issues arising from the technology.

“Advisors need to be on top of the technical areas of AI while providing broader advice on issues like redundancy, upgrades, and system integration,” he says. “There are many potential new areas for finance specialists who are willing to get involved, but they need to start now.”

* Leading and Managing Change in the Age of Disruption and Artificial Intelligence
, Mathew Donald, Emerald Publishing, 2019.

Taxing issues for 2019/2020

Appearing in In The Black magazine, March 2020


With the end of the current financial year in sight, tax advisers have to be aware of moves by the Australian Tax Office to improve the level of compliance as it works through existing programs and introduces some new initiatives.

Generally, the ATO is pleased with the direction of change, judging from recent comments by its head, Chris Jordan*. In the past few Budgets the ATO has received funding increases which it has used to address the income tax gap and the black economy. There has also been ongoing support for the Tax Avoidance and Phoenix Taskforces.

The intelligence-gathering work of the ATO has also increased, with tip-offs to its Tax Integrity Centre at record levels. As a result the ATO has conducted audit visits to businesses in areas where there appears to be a high level of black economy behaviour, such as not reporting transactions made in cash. The Melbourne suburbs of Frankston and Croydon, and Bega on the south coast of New South Wales have been targeted by the ATO in this program.

The high level of tip-offs might signal a social change, away from the longstanding culture of ‘gaming’ the tax rules towards the view that the system should be fair and transparent.

At another level, the introduction of Single Touch Payroll and the expansion of the Taxable Payments Reporting Systems appears to have improved compliance due to enhanced reporting.

“It is important that everyone pays their fair share of tax, no more and no less,” says Elinor Kasapidis, Tax Policy Adviser at CPA Australia. “The ATO has been signalling for some time the industries and practices where it has concerns. The latest efforts are a continuation of ongoing compliance activities to address the black economy. That has our support.”

Michael Papandrea FCPA, Director of ACT-based Papandrea Partners, sees the advances in technology and information-gathering that the ATO has made as a game changer.

“From a practice perspective we have to keep abreast of the changes under way,” he says. “Advisers have to ensure that they have the systems and training in place to consistently identify the clients who may be impacted by such changes, or areas of risk within their practice. Checklists and investment in smart software can be very useful in this.”


Issues for attention

An area that the ATO has long identified as problematic is rental income. In particular, on the deductions side, the ATO has indicated that some taxpayers claim travel expenses to visit their rental properties, while some claim expenses under repairs when they should be depreciated. There have been other cases where mortgage interest has been claimed when the property was not rented or available for rent, but was a holiday house.

Some property investors who do not use tax advisers seem to be unaware of the ATO’s data-matching capabilities, and so make claims that might not be fully compliant. This could represent at opportunity for tax advisers to increase their client base by emphasising that professional advice is now not just useful but effectively essential.

“Unfortunately, with the information available from Tax Advisor Google many taxpayers believe they are experts,” says Papandrea. “With its new AI systems the ATO has the ability to match behaviour with what is being declared. Up until now the cross-checking system has been limited. AI is closing that gap, so information will be available almost instantaneously to the ATO. This is where compliance is headed.”

Papandrea, looking towards the end of the financial year, believes that the ATO will continue its focus on GST compliance, especially GST on property transactions. Inappropriate claims on vehicle expenses or travel expenses will be another area of attention, as will debt forgiveness and trust distributions. Issues around the Superannuation Guarantee are likely to figure over the next few years, especially with an amnesty currently in place.

Kasapidis adds that the ATO has updated its information on private groups and has proposed increasing the reporting burden on high-wealth groups. There is also an ATO draft ruling on work-related expenses for non-business taxpayers which may impact some claims.

Another issue for tax advisers is the change Is the lodgement method, with the introduction of myGov ID and Relationship Access Manager. The previous ATO Portals system was the subject of criticism as lacking some functionality and not being user-friendly. While the new system might experience some teething problems the general view is that it will, over time, improve efficiencies for tax practices. However, advisers will need to ensure they are fully conversant with it before the end of the year, and that security issues such as password protection are addressed.

Looking ahead

The overall trend is that the ATO is getting smarter at ensuring compliance. Taxpayers who might be tempted to ‘sail close to the wind’ should bear this in mind, and advisers should ensure that clients understand the message.

“Advisors should have their systems and knowledge up to speed and need to ensure that they can dissect their client base to identify the risk areas,” Papandrea notes. “They need to be on the front foot. Documenting discussions and advice at every stage is critical.
“The ATO is also looking closely at tax agents who have statistically been making the highest claims. Who would want to be dealing with that? You need to protect your brand and reputation.”

In the longer term, the move towards pre-filled returns for many taxpayers will mean that the business model of many practices will have to change.

“While increasing volumes of data are being used for pre-fill, tax advisers and agents still add value in more complex areas of tax and ensuring their clients have access to the full range of concessions and deductions available to them,” says Kasapidis. “Notwithstanding this, CPA Australia has for many years encouraged members to enhance their offerings to clients and focus on value-added services.”

Papandrea agrees. “Compliance will continue to be an integral part of any accounting business if done properly,” he says. “For example, a compliance review of a client’s affairs to stay abreast of the legislative changes and risk areas is the perfect segue into identifying areas of the client’s business that may require attention. This in turn leads to broader business advice for the client and the opportunity for a practitioner to expand into advisory services.”

* See the November 2019 issue of In The Black, ‘ATO’s Chris Jordan: the man with a tax plan’, at

Holiday reading

Appearing in In The Black magazine, December 2019


The Vagabonds: The Story of Henry Ford and Thomas Edison’s Ten-Year Road Trip
By Jeff Guinn
Simon & Schuster, $40

Vagabonds book coverJumping into a car and heading for the horizon is an idea often associated with young people but it was, in fact, started by two American inventors late in their careers. Edison was the tech entrepreneur of his era, and Ford had created the first affordable vehicles. When they met in 1911 they hit it off, and in 1914 they decided to hit the road. They continued to take regular sojourns for the next decade. They did not exactly rough it, with an accompanying convoy carrying camping and cooking equipment, servants, and a chef.

They traversed the American hinterland, a nearly roadless and often impoverished setting. By all accounts they had a wonderful time. Guinn punctuates the story with vivid portraits and interesting side-trips, and it adds up to an enjoyable tale. One is never too old for an adventure.


How To Do Nothing: Resisting the Attention Economy
By Jenny Odell
Melville House, $49

The early promise of the Internet was about binding people together in a network of opportunities and information. True to an extent, but the darker side is the way the screen often leads to disconnection from the real world. Odell, an artist at Stanford University, believes that we will lead longer, happier, more responsible lives if we ditch the devices occasionally and spend some time doing simple things that brings us satisfaction. After all, the objective of the tech platforms is to keep us looking at the screen so they can make money. Not much of a reason for us to give them so much of our lives, really.

So hit the ‘off’ button. Take a walk, hug someone you love, listen to the world, do something slowly. These things might not sound like much, but they are everything.

How To Do Nothing book cover


The Future is Asian: Global Order in the Twenty-first Century
By Parag Khanna
Hachette, $23

Parag Khanna, Managing Partner of FutureMap, a scenario planning and strategic advisory firm, is very good at drawing disparate pieces of information into a meaningful picture. He collects data on trade, demography and technology to paint a picture of a rising Asia, powered along by an aspirational middle class of over two billion people.

Future is AsianToo often, he says, Western commentators think of Asia only as China and the Pacific Rim. This region is important, he readily acknowledges, but there are plenty of interesting things happening on the Indian subcontinent, Central Asia and the Gulf States. Underpinning the boom in intra-Asian trade is new-gen infrastructure, especially China’s ‘Belts and Roads Initiative’.

Of course, it is not going to be all smooth sailing. Many countries have a legacy of political instability and corruption, and others have longstanding disputes with neighbours. There are no easy solutions but, on balance, Khanna is optimistic.



Think Like Amazon: 50 1/2 Ideas to Become a Digital Leader
By John Rossman
McGraw-Hill, $40

Remember when Amazon just sold books? Now it bestrides the world, and everyone wants to know how Jeff Bezos & Co did it. Rossman was a senior Amazon executive who worked on the scalability side, so he is well-placed to explain. He offers a long list of guiding principles, ranging from developing platforms that can provide self-service growth to focusing metrics on customer relations to using AI-based technologies wherever possible.

On culture, Rossman emphasises the value of semi-autonomous teams and of constant testing and reviews. Even successful units are told to look for disruption opportunities in their area. Bonuses are given in shares and not cash.

Interesting stuff, although occasionally Rossman might have delved more deeply rather than skimming across the surface. Few companies could use all of these suggestions but most could learn from at least some.


The Moment of Lift: How Empowering Women Changes the World
By Melinda Gates
Macmillan, $33

As the wife of Bill, Melinda Gates could have chosen a simple life of counting money and attending parties. Instead, she – and spouse – jumped into global philanthropy, trying to focus their energy and resources where they could do the most good. For Melinda this meant working with women in under-developed countries, on the basis that they were the ones most likely to lift up their communities. She started with the idea that contraception should be readily available but soon realised that a change of mindset through education was needed.

This concept is not new but here it somehow feels fresh. Gates admits there have been times when she felt almost overwhelmed. She was only able to keep going by occasional personal successes – a “moment of lift”. It is a powerful, touching sentiment by someone who is intent on making the world a better place.



The Non-Obvious Guide to Emotional Intelligence (You Can Actually Use)
By Kerry Goyette
IdeaPress, $31

Many discussions on Emotional Intelligence quickly start to sound like feel-good fuzziness but Goyette, who was a psychotherapist before becoming a business adviser, keeps her focus on the practical. She explains how leaders can become more aware of their emotions by asking the right questions of themselves and by seeking feedback from others. This helps them to understand their own motivations and ultimately improves their decision-making.

The book has guides, tests and case studies to show how stronger EI can help a leader overcome performance derailers such as conflict avoidance and impulsivity. Once someone has improved their EI they can more easily recognise problems in others and lead them to better outcomes.

Goyette acknowledges that developing this level of self-awareness is not easy. But the gains in professional achievement and personal satisfaction make it, in the end, a worthwhile journey.


Outspoken: Why Women’s Voices Get Silenced and How To Set Them Free
By Veronica Rueckert
HarperBusiness, $60

Outspoken book coverSpeaking is not difficult, says communications coach Rueckert. Being heard: that is difficult. She has solid advice for women who want their voice to be heard, in both literal and figurative senses. She examines research showing how often women in the workplace are ignored due to their method of speaking, and suggests techniques on how to avoid being interrupted and how to interrupt a conversation – or monologue – successfully. She has interesting things to say about claiming physical space and asserting the right to speak without being aggressive.

Rueckert, who is a trained opera singer, also tackles the mechanics of voice projection, including useful exercises to help transcend “cubicle voice”. Her tone is encouraging and supportive, and sometimes funny. But she never loses sight of her serious point: that liberating the female voice is a key to liberating the self.


Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries
By Safi Bahcall
St Martin’s Press, $27

Bahcall is a physicist who specialises in a field called phase transitions, such as when water turns to ice. He believes that this explains a wide range of shifts, from voting to the flocking of birds. A series of small structural events tip each other into a cascade.

The main thrust of this book is how phase transition fuels innovation, especially at the leading edge of possibilities. Bahcall presents plenty of examples in science and business, and finds a common thread of ideas being transferred between (apparently) unrelated fields by eccentric individuals. A once-crazy idea suddenly looks plausible, even inevitable. This is uncommon in large organisations, although they can compensate by establishing quasi-independent units of creative mavericks.

Bahcall believes that this area will be a key driver in the next decades. If his enthusiasm is an indication, he might be right.

Loonshots book cover

Building negotiation skills

Appearing On In The Black Digital site, October 2019


Everyday, we act as negotiators. But we seldom think about the skills required or the processes we must follow to negotiate successfully, according to Chas Savage, CEO of Ethos CRS, a company that specialises in customised capability training in communications, regulation, policy, and leadership. In his CPA Congress address, ‘Mastering Negotiation Skills’, he examines the requirements of successful negotiations, especially in business.
“The negotiating process is about how you can create and increase value,” he says. “Ideally, it involves a conclusion that involves everyone walking away satisfied.”
There are two types of negotiations. The first is transactional. One side gains while the other side loses, at least in the short term. The zero-sum nature involved means that this type of negotiation is not well-suited if there has to be a long-term relationship between the parties.
The other type, collaborative negotiations, is one in which both sides maximise their gains and minimise their losses, because they work to realise common objectives.
negotiation“It is important that you don’t mistake one for the other,” says Savage. “Any negotiation requires clarity of mind – and a lot of homework. You must understand what the other side wants, both the practical elements and the psychological needs. Yes, negotiation is a form of manipulation, but that does not mean that it cannot work out to the benefit of both parties.”
As an exercise, Savage asked the audience to put themselves in the position of the North Korean negotiators dealing with the US team and President Donald Trump, trying to reach an agreement over nuclear weapons. This helped to understand how to assess the needs of those on the other side of the table.

Planning needed

Much of the hard thinking has to be done even before negotiations begin. What is your real objective? What are you willing to do to achieve it? What do you think the other side is trying to achieve, and what will they give up? What is the anticipated outcome, your minimum acceptable outcome, and your ideal outcome? Is no deal better than a bad deal?
A critical part of this is knowing what you will do if negotiations fail. This is called the Best Alternative To a Negotiated Agreement, or BATNA. The key is to establish and expand the areas of agreement. This is the Zone of Possible Agreement, or ZOPA. The larger the ZOPA the more the two sides will seek to collaborate.
“Business negotiations are generally done by teams,” Savage notes. “And everyone in the team must know what their role is and who is leading the team. The last thing you want is your own people contradicting each other or not having required information to hand. The good cop/bad cop tactic, where one member of the team makes extreme demands and another one offers a more moderate position, can be useful, but everyone has to know exactly what they are doing.”
Depending on the nature of the negotiations, it can be very useful to conduct a test run, with an ‘opposing’ team. Gaming can reveal potential problems and weaknesses, which can be addressed before the real thing starts.

Tactics and trust

Good preparation makes for good negotiations but across-the-table tactics are also crucial. A solid start is to cite standards, precedents, and the benefits of an agreement. This will provide a framework for discussion. From here, it should be possible to divide the negotiations into small steps, to minimise risks and misunderstandings. However, there has be a clear focus on the overall objective, and disputes on unrelated issues should be closed down immediately.
“There needs to be an element of trust,” says Savage. “That doesn’t mean you have to like each other. It just means that you have to know the other side can and will deliver on their commitments, and they know that you can and will deliver on yours.”
A useful idea is to draft an agreement document as soon as possible in the process, to give discussions a focal point. But ensure that there is only one copy in circulation at a time. The two sides having different documents is a recipe for conflict, and an undermining of trust. Do not, Savage emphasises, allow the other side to draft the document.
“In the closing stage, look for things like fading counter-arguments, body language suggesting fatigue, and converging positions,” he says. “The end is then in sight. Once there is an agreement, follow up promptly on the commitments you have made.”
Savage makes the point that the negotiation process can be intellectually and physically demanding. Complex negotiations require a high level of concentration over an extended period.
“Make sure you are healthy and relaxed,” Savage suggests. “There should be planned time and resources for rest and recovery. It’s hard work, after all.”

AAT minefield

Appearing in In The Black magazine, November 2019


Registered tax agents should think carefully before representing a client on a tax dispute at the Administrative Appeals Tribunal, as many of the rules are unclear and the issues are poorly-defined. It is entirely legal for accountants to appear for a client at the AAT – in fact, the Tax Agent Services Act expressly allows registered tax agents to do so – but that they can does not automatically mean that they should.
According to figures provided by the AAT in its submission to the review of the Tax Practitioners Board, last year about 30 per cent of people who took a tax dispute to the AAT were represented by their accountant/tax agent, or 198 of the 316 cases in the Taxation and Commercial Division. In the other cases, the appellant was represented by a lawyer.
The AAT is not a court but an administrative body that reviews specific decisions of other government agencies, including the Australian Tax Office. It considers whether, on the facts presented to it, the correct or preferable decision was made in respect of the applicable law, rules and government procedures. Its own decisions are judicially reviewable.
Despite the administrative status of the AAT, many issues put before it involve questions of statutory interpretation and close reading of rules. This raises a critical question for accountants: where is the line that separates appropriate tax advice to a client from unqualified legal advice?
Melbourne barrister and part-time Deputy President of the AAT, Frank O’Loughin QC, notes that when tax agents present cases in the AAT on behalf of their clients they are involved in work that includes both legal and factual elements.
“Applying taxation laws to the facts of a taxpayer’s case is always legal work,” he says. “Registered tax agents are permitted to represent their clients in undertaking this work. Different aspects of Australia’s tax system call for deployment of different types of skill and knowledge. Some aspects of the work in the AAT lend themselves to the skills of accountants, others lend themselves to the skills of lawyers. Other aspects are common to both.”

Safe harbour

The TASA provides a ‘safe harbour’ for registered tax agents against the prohibition on legal advice. This is a provision in a law or regulation that affords protection from liability or penalty under specific situations, or if certain conditions are met. The safe harbour concept is used in several areas of law, including taxation.
Stormy harbourA difficulty is that it applies only when an accountant is doing the ordinary, ‘bread and butter’ work of an accountant, including advising on general Commonwealth tax issues.
Chris Wallis, a barrister who has published a number of articles on the subject, believes that many accountants do not really understand the limits of the ‘legal advice’ safe harbour. He also questions a key decision known as the Felman Bubble.
The Felman Bubble concept is derived from the decision in Felman v Law Institute of Victoria [1998] 4 VR 324; (1997) 142 FLR 383, where Kenny J said [at pp.383-4]
… a tax agent who gives advice, as to income tax matters … does not give what is ordinarily understood as legal advice …

“Accountants have long believed that they are entitled to give advice, including legal advice, about the operation of the tax laws more generally,” he says. “But there is no legal basis for this belief, even if the advice is provided in relation to the preparation and lodging of a tax return.”
Wallis cautions that the Felman Bubble does not extend to work in relation to state taxes or superannuation (other than in the context of income tax).
He sees no real difference between ‘engaging in legal practice’ and providing legal advice, a distinction sometime made in the literature and legislation. He believes that accountants’ training simply does not extend to commercial law, legal personality, equity or rules of evidence.

Issues with TASA

John Morgan, a Melbourne barrister highly experienced in the tax field, likewise sees the weakness of the Felman decision, and argues that a registered tax agent must know not only the tax law but the general law as well, and so must have comparable skills to a legal professional.
“Tax agents are allowed to give ‘advice’ about ’taxation laws’ because it is a ‘tax agent service’ under s90-5(1)(a)(ii) of TASA 2009, and a Federal law overrides the State and Territory laws that prohibit unqualified legal practice,” he says. “Whether this protects non-lawyers from any advice they give that culminates in a tax liability has not apparently been not tested. It may be that a Court would ‘read down’ the TASA protection, in cases where the ‘public interest’ was not served, because of the complexity of the general law.”
There is also the possibility that the TASA may be unconstitutional in attempting to give non-lawyers the right to ‘give advice’ on general law matters, or on ‘liabilities under taxation laws’, at all.
“In any event, registered agents must comply with the TASA requirements, including the Code of Conduct,” Morgan notes. “This includes an obligation to do this, amongst other things, ‘competently’. Often this will be difficult without legal training.”
Morgan also points out that providing legal documents to a client is fairly clearly outside what tax agents are permitted to do. A breach of the Code of Conduct can lead to disciplinary action by the TPB, resulting in suspension or cancellation of registration.
There is also legislation in each state and territory that prohibits an unqualified, uncertified person from engaging in legal practice, and substantial penalties are involved, with similar carve-out arrangements impacting accountants.
And just because a matter relates to tax does not mean that it qualifies for the carve-out: it can depend on the particular circumstances of a case.

Serving the client

Another issue that Wallis raises is the potential for accountants to unwittingly engage in legal practice when they choose to represent a client at the AAT. He believes that many accountants who go to the AAT do not understand the breadth of the issues that can arise and whether the Felman Bubble, while it applies to the representation in the hearing, can be stretched to the research and other work required to prepare for the hearing.
“An accountant before the AAT is almost always appearing to defend a client in relation to work undertaken by the accountant,” he says. “If the accountant submits that the client had provided everything that was needed the accountant has implicitly advised on evidence rather than tax. Similarly, if the accountant concludes that the client did not provide everything that was needed they are advising on evidence.”
He also takes the view that it might be appropriate to require registered tax practitioners to undertake relevant continuing professional development in this area to qualify for the safe harbour provisions.
John Morgan emphasises that in the objection process there is a need to inform the client of the available options, including independent advice, representation by a lawyer and the choice between the AAT and the Federal Court.
“Strange as it sounds, there have been accountants who go to the AAT without their client’s knowledge,” he says. “Perhaps they are trying to defend a mistake they have made. In any case, it is hard to see that it meets the standards of the Code of Conduct.”
Chris Wallis emphasises that the protective strength of the Felman Bubble, which applies in Victoria but not necessarily in other states, is untested.
“From a tax practitioner’s point of view, a prohibition without a bright line test is a disaster waiting to happen,” he says. “The lesson is: if you go to the AAT, be very sure about the scope of the task you are undertaking and why you are doing it.”

Realistic assessment

Accountants who appear at the AAT should be aware of the indemnity issues, although Director of Fenton Green, CPAA’s Insurance Broking partner notes that not all PI Policies provide complying cover for accountants. “The Professional Indemnity policy coverage needs to provide cover for CPA By Laws as well as all usual professional activities an accountant would undertake. That would include going to the AAT for a review.”
He goes on to suggest that accountants representing their clients at the AAT should keep clear records relating to verbal advice and always reiterate verbal advice in writing. “Do not stray from providing factual and verifiable accounting advice for taxation and bankruptcy,” he says. “Peripheral and personal advice should be highly avoided.”
Deliberately committing an offence invalidates the policy through a ‘fraud and dishonesty’ exclusion. There is a ‘write back’ provision for innocent partners in a practice.
Fenton advises that taking a case to the AAT can involve significant time and effort.
“This decision really needs to be made jointly through consultation between accountant and client,” he says. “Part of that discussion should be to identify the possible benefits as well the chances of success. You have to be realistic in your assessment.”