Does the Australian tax system still need significant reform? Will this be a priority for the government?

Yes, the Australian tax system urgently requires fundamental reform. It remains overly complex, with numerous taxes contributing relatively little revenue. The government has indicated openness to reform in areas such as superannuation, the Goods and Services Tax (GST), and capital gains tax (CGT), though politically sensitive measures—such as taxing the family home—remain off the table.

Post-2025, reform momentum is expected to increase, driven by:

• The need to broaden the tax base
• Demographic pressures on public spending
• Strong calls from the business community for simplification and investment incentives

Have there been any significant regulatory developments in Australia over the last 12 months?

Yes. Key developments include:

• The introduction of a mandatory merger control regime, commencing 1 January 2026, which will replace the current voluntary notification system. This is expected to materially affect merger and acquisition strategies.
• Heightened enforcement by APRA of superannuation trustees’ compliance with Prudential Standard SPS 530, particularly regarding asset valuation and liquidity risk management.
• The Council of Financial Regulators (CFR) continues to monitor the effects of elevated interest rates on financial system resilience.

How would you describe the health of the accounting industry in Australia in terms of customer demand, fee pressure, and staff recruitment and retention?

Customer demand remains robust, particularly for integrated tax, legal, and business advisory services. Fee pressure persists in traditional compliance areas due to automation, standardisation, and offshore competition. However, advisory and specialist service lines retain pricing power.

The industry faces a significant and ongoing skills shortage, especially in audit, tax, and mid-to-senior-level roles. This has led to increased wage pressure and a heightened focus on talent development, retention strategies, and employer branding. Many firms are leveraging offshore solutions to access a broader talent pool, manage capacity, and free up local staff to focus on higher-value advisory work—contributing to improved work-life balance for onshore teams.

Are there any service areas where demand has grown over the last 12 months?

Yes. Key growth areas include:

• ESG Reporting & Sustainability: Increased demand from clients—particularly larger firms—for the integration of environmental, social, and governance (ESG) metrics into financial and non-financial reporting frameworks.
• Cross-border Tax & Transfer Pricing: Particularly among Asia-Pacific subsidiaries of multinational enterprises.
• Outsourced CFO & Advisory Services: Especially for SMEs seeking financial modelling, forecasting, and strategic budgeting support.
• Business Restructuring & Insolvency: Demand has risen due to higher borrowing costs and tightening credit conditions, particularly in the construction and retail sectors.

Has there been any significant consolidation or merger activity in the accounting profession?

Yes, selective consolidation is occurring, particularly among mid-tier and boutique firms seeking greater scale, geographic reach, or specialised capabilities. The upcoming ACCC mandatory merger control regime, commencing in January 2026, is expected to influence deal processes for larger transactions, although it is unlikely to affect most accounting firm mergers due to the relatively high notification thresholds.

Additionally, non-traditional entrants—such as law firms, private equity-backed platforms, and technology companies—are increasingly partnering with or acquiring accounting practices to expand their service offerings and enhance client retention.

What are your expectations for the next 12 months – are there any potentially significant developments in the pipeline?

We expect:

• The Treasury to explore, and potentially release, discussion papers or policy directions on key areas such as GST reform, capital gains tax concessions, and intergenerational tax equity. While these topics remain under active public and professional debate, no formal consultation documents have been released to date.
• A renewed focus on audit independence, particularly in the wake of international developments and increasing local regulatory scrutiny.
• Continued investment in AI and automation, leading to enhanced service delivery models and more sophisticated client solutions.
• Greater integration across professional service disciplines (accounting, legal, and financial advisory), with firms positioning themselves as holistic advisors throughout the client lifecycle.