Letter of the month
Skills that dont thrill
As a CPA with over 20 years' experience in public practice, I wonder what fellow members think of the so called 'skills crisis'. I am aware that there is little CPA Australia can do to rectify the problem but, nevertheless, I do think CPA Australia should sponsor some competent research into whether the concerns I raise have any basis in fact. The points Ive included below are offered for reflection.
Accountancy as a career is not only becoming less attractive to school leavers, but public practice is increasingly failing to draw its share of the falling numbers.
The Generation Y work ethic is creating a dumbing down of tax knowledge in public practice. By this I mean younger graduates are much more likely to view tax as just a job not a passion for knowledge or excellence. As a result, they read less outside of work and often hold a depth of knowledge well below what was considered not only competent but the norm only 10 or 15 years ago.
The error rate, poor tax planning and omissions occurring in public practice are rapidly rising as firms struggle to find, recruit, train and hold competent staff.
Retiring CPAs are increasingly being forced to sell their practices to accountants who have worryingly limited public practice and / or tax experience.
Accountants with good public practice skills and a comprehensive knowledge of tax law often earn a lot more than comparably skilled accountants working for wages in commerce. Younger accountants, however, are often reluctant to wait, learn and train for these higher incomes.
The above are not comfortable issues, but I do think they deserve some exposure and discussion.
Robert Lopez CPA
Via email
A proud CPA
As a young accountant, I write this to express the pride I felt upon receiving my membership certificate that came along with my advancement to CPA status.
Graduating from university in 2003, my career so far is undoubtedly brief in comparison to veteran accountants. However, it has been full of meaningful insights and experiences.
Although my day job revolves around audit and taxation, I developed a heavy interest in personal finance early in my career; an interest that led to my authoring of a wealth-management book that was recently published.
Realising that personal finance is increasingly being muddled and confused with get-rich-quick schemes and concepts, I took it upon myself to advocate responsible and ethical wealth creation. It felt like it was a lonely fight, and I can only hope that my book and blogs make a dent in the psyche of the masses.
Upon receiving my membership certificate, however, the sudden realisation that I was not alone dawned upon me.
I had almost forgotten that all this time, I was an associate of a socially responsible and progressive organisation.
It may be somewhat natural for some young accountants to be so immersed in the everyday duties of their roles that the true meaning of professional service is neglected.
I would just like to say that I have rediscovered my belief in the profession, and understand from a new perspec-tive the importance of professional associations in building a culture of social service and personal integrity, as opposed to working solely for commercial profit.
The postnominals 'CPA' have laid on me a responsibility to society at large. It is a responsibility of which I am extremely proud.
Andrew Chua CPA
Malaysia
Working what?
Whatever happened to the term 'working capital'? Not so many years ago, it was mentioned prominently in most accounting text books and journals, where, although it had a convoluted definition, students were nevertheless made aware of it and its significance in better understanding the financial situation of a business.
Nowadays, references to it are few or non-existent, except on a rare occasion when the term may be used, sometimes incorrectly, in an article dealing with financial management.
Has the increasing use of computer programs tossing out figures in some prearranged way with meanings al-ready laid down so as to minimise thinking led to such a change?
Loftus Dun FCPA
Oatley NSW
Exclusive use test not met
The personal services rules dont apply where any of several tests set out in the law are met (See Taxing Times, November issue). One is the business premises test; it can only be satisfied when, for the whole of the income year, there are business premises meeting several requirements, including exclusive use, and physical separation from any premises the individual, the personal services entity or any associate of either use for private purposes.
The issue wasnt just whether the company had exclusive use of premises consisting of an office over a garage. (They didnt. The garage was substantially for private use by the family.)
There was a real question whether the office over the garage was physically separate from the house, grounds, driveways and so on making up the property in the case. Justice Emmett in the Federal Court (FC of T v Dixon Consulting Pty Ltd [2006] FCA 1748) made it clear that this was not resolved by the AAT in the proceedings appealed to him (see paragraphs 45 48 of his judgement); and it was not resolved in the later AAT proceedings either, because the company failed the 'exclusive use' test even if the premises were separate.
But in that case the whole property had only one access: one driveway. And that driveway and the open space on the property were used both to get access to the office / garage premises and for all the purposes of the house prem-ises and of the use of the whole property. Mr Richards shouldnt assume that the office / garage premises were physically separate, or that other such offices would be. Mr Richards regards even application of the 'exclusive use' requirement as 'very harsh'. But the business test is just one of the four provisions allowing taxpayers to be sure they dont have to apply the personal services rules at all. When you have personal services income, yourself or through an entity, the personal services rules do no more than treat you like other taxpayers with the same sort of income if they apply.
Chris Hood
Queanbeyan NSW
In love with taxing times
I am in love with INTHEBLACK, especially Taxing Times written by Robert Richards every month. Please dont take this as a criticism but I feel that the photograph of overdue account used on page 69 of the November 2007 issue could rather have been one of the very infamous 'notice to pay' nasty ATO letters. After all, that's what the article relates to. I am sure most of us would have had a close encounter with one of those letters and would relate to the article better seeing one of them there.
Manu Gupta ASA
Via email
A fair crack
A senior public servant emailed me some time ago, writing, 'My recommendation to ensure that our organisation survives is that any mature-aged officers over the age of, say, 65 should be retired as they could not possibly be as productive as a less mature-aged person.'
Well! I'm retiring on Friday at 76 years of age having served over 50 years in federal and state public services. My wife and I, like Reyn Keats ('Give a digger a break', November Feedback) and his wife, will depend entirely on our income from investments and, superannuation. Because of my age I could not take advantage of the latest government incentives regarding superannuation.
To get to the point, Reyn and I and many others have contributed tax all our working lives and have not had any opportunities to enter tax shelters or the like. We are always the PAYG people. We have contributed well to the nation in both tax and productivity and now the nation could reward us by only taxing us when we reach, say, 75, at a rate of 10 or 15 per cent of our income.
John Campbell FCPA
Via email
Anti anti-money laundering
I can't help but chuckle to myself whenever I see articles on 'anti-money laundering'. Because the hyphen between 'anti' and 'money' to me looks like we are against money. Shouldnt we be against 'money-laundering'? Shouldnt the phrase be constructed 'anti money-laundering'?
K. M. Brown CPA
Via email
CPA Australia responds
You would have a case for 'anti-money-laundering' legislation, but that looks a little clunky. The main point is to avoid confusion, so we might have to reassess our style, which is to hyphenate 'anti' in compound adjectives such as this.
Letter of the month
Next month's letter of the month winner receives a set of Trilogy (blue / purple / aqua) cufflinks for men, or a pair of Eternity II (purple) cufflinks for women.
Care to comment on any business or accounting issue, or want to let us know what you think of INTHEBLACK? Send your feedback to: INTHEBLACK.inbasket@itechne.com
Letters should be kept to fewer than 250 words, and may be edited for length and style.
Reference: February 2008, volume 78:01, p. 10 11
