CPA Australia surveyed 700 small businesses and 105 CPA accountants on issues surrounding small businesses' compliance, particularly in relation to taxation and superannuation.

The topic of crisis impacts on small business was also explored in the survey in light of the uncertainty dominating the current business environment and the outbreak of recent disasters such as drought and bushfires.

Participants were selected at random across all states and territories and in both regional and metropolitan areas.

Summary of key findings

Responsibility for compliance requirements

• The majority of small businesses seek the assistance of an accountant to complete their annual income tax return. However, in most cases compliance obligations are shared between the accountant, the proprietor and staff. Thirty per cent of businesses use an accountant for BAS returns and 32 per cent for other tax obligations, 39 per cent for company law requirements and 20 per cent get help with Super Guarantee Levy compliance.
• CPA accountants have seen an increase in the number of small business clients using their services for BAS returns (50 per cent) and annual tax returns (54 per cent) over the past two years, however other compliance areas have not seen major increases.
• Forty-one per cent of small businesses are paying more in accounting fees now than they were two years ago.

Time taken to complete compliance activities

• Many businesses, particularly non-employers, have experienced little change in compliance obligations over the past two years, however where change has occurred it is more likely to be an increase than a decrease.
• Thirty-four per cent of small businesses have seen an increase in the time needed for BAS returns, 30 per cent experienced an increase in time required for annual income tax returns and around 16 per cent saw an increase in other taxes, SGL, and workers' compensation.
• The time for CPAs to complete BAS and annual returns has increased by around 51 per cent and 89 per cent respectively.

Understanding compliance obligations

• Thirty-seven per cent of businesses are experiencing difficulty with the BAS and 25 per cent with annual tax returns and a further 22 per cent find OH&S obligations difficult.
• The larger the business the more likely it is to have trouble with OH&S
• Accountants felt many of their small business clients do not have a good understanding of compliance obligations with only 47 per cent understanding BAS returns, 39 per cent for Annual Income Tax return and SGL. Accountants rated their clients knowledge of wages and payroll and workers' compensation higher at 69 and 54 per cent respectively.
• Both CPAs and small businesses agreed that BAS returns and annual income tax return areas are the ones most in need of simplification.

Simplified Tax System (STS)

• The survey demonstrated the degree of confusion amongst small business about the STS, with 25 per cent unsure about whether they use the system or not.
  
• Amongst CPAs, 32 per cent had no clients using STS and a further 20 per cent had less than 10 per cent of their clients using the system. Only 16 per cent of accountants have more than 70 per cent of their clients using STS.
• The main reasons for not using STS given by both accountants and small businesses are that it is too complicated and of little value to the particular business.

Perceptions about compliance

• Three-quarters of small businesses claim that compliance obligations act as an incentive to keep up-to-date with record keeping and that they run financial reports regularly to manage the business.
• Sixty-two per cent resent the time needed to comply with tax obligations and 41 per cent feel the paperwork burden has increased to the point where they question staying in business. Fifty-two per cent are outsourcing more paperwork than ever before.
• Sixty-four per cent wish there was someone who could make the government aware of their problems.

Superannuation Guarantee Levy (SGL)

• More small businesses remit their SGL payments monthly (35 per cent) than quarterly (26 per cent) or annually (14 per cent). The bulk of employers spend up to one hour per employee on average to administer those SGL obligations – with only a few spending over one hour per employee.
• Slightly more businesses provide a choice of superannuation funds to staff than no choice – 40 per cent to 30 per cent. If choice of funds becomes law, small business are more likely to feel that this will result in extra work than otherwise.
• Small businesses are much more inclined to ask the funds to provide information to their employees than doing so themselves. Only 19 per cent of small businesses have had staff ask them for advice or information on the SGL.
• Accountants are the major source of assistance for self-managed super funds over financial planners or superannuation specialists.