CCH iFirm Tax overview: When a Tax Program Eats the Master Tax Guide…

Related: CCH Adds Predictive Intelligence to iFirm for Faster Tax

The first online tax programs hit the Australian market this year with CCH iFirm Tax and Xero Tax and releasing in May. MYOB this month announced it is in a closed beta with several tax forms for its online update to MYOB Tax. Reckon says it is also working on a similar product.

As one of the first solutions in market, CCH has come out of the blocks swinging for the future of compliance. “We don’t buy into this concept that tax incomes for accounting firms are going to be wiped out and completely automated,” says Daniel Wyner, director of strategy for CCH Australia, Wolters Kluwer. “We firmly believe there’s a strong future for tax practitioners.”

CCH’s plan is to increase the value of compliance its client firms provide. It does this by integrating the cloud-based iFirm practice management suite with the company’s greatest asset, the information services division which produce the CCH Master Tax Guide.

Firms that want to keep making money from compliance need to convert their sausage factories into organic butcheries. The client will pay a premium for a higher quality product which in this case means personal advice.

“The output is where firms are placing the value but (it needs to be) in terms of placing advice. (Compliance) will have to be less transactional but more consultatory,” Wyner says.

How do you add advice to compliance? By increasing the depth of knowledge of “tax events” that affect your clients generally and of industry-specific regulations which benefit individual clients.

The end goal for CCH iFirm is a practice suite that provides bespoke tax advice on-tap by automatically tapping its information reservoirs that sit behind the CCH Master Tax Guide.

Now that we have set the scene, let’s take a look at one of the latest products, CCH iFirm Tax. It is available as a standalone product but of course is most useful as part of the integrated CCH iFirm suite.

The job workflows in iFirm will measure the efficiency of accountants in completing a job and calculate their time or job budget accordingly.

Accounting firms switching their internal systems to cloud or online software could use CCH Tax as a server-free replacement for MYOB Tax or Reckon Tax, Wyner points out.

The first checkbox is the catalogue of forms. CCH Tax includes all form types a firm needs to lodge. CCH released the FY2015 forms in mid-May and has had firms using it since 30 June last year in a limited release with individual and company returns.

While CCH Tax Online looks similar to the desktop program it has been written to be “scroll friendly and not click friendly”, Wyner says. The rebuild reduces the number of screens required to file a return by putting income and deductions on one longer, scrolling page.

The program highlights data that looks incorrect. For example, if a field will cause an error with the ATO on submission the program will highlight the cell in bright orange.

CCH has combined the licences for both online and desktop programs. The online program is faster and more useful for current returns. If a client walks in with several years of returns the firm can fire up the desktop program and access tax tables back to 1997.

The online program can import data from the desktop version so CCH Tax Online just rolls up the prior year automatically. This is a more efficient approach than using online and desktop tax programs by different providers which will require the firm to rekey data to the online program the following year, Wyner says.

CCH Tax calculates tax payable using tax tables – invisibly upgraded throughout the year, as in all online tax programs – and by drawing on the rules listed in the Master Tax Guide.

Relevant rules or commentary can be viewed in every cell by clicking on an information button. The data itself is published on CCH’s online information library, iKnow.

“There is no way to know every tax treatment. The Guide is the single source for fast answers,” Wyner says. “Now you no longer have to look for that information. That automatically is a bit of a game changer.”

Take-up and firm profile

Last financial year CCH Tax users (desktop and online programs) lodged 70,000 returns with a lodgement acceptance rate of 95 percent. In the first two months of this financial year the number of returns was 35,000 and the acceptance rate over 97 percent.

“To be just under 98 percent in a short time is vindicating. It says we’re able to build a really solid tax platform that is being ticked off 98 percent of the time, first time, by the ATO,” Wyner says.

The bulk of CCH Tax firms have five to 10 users. The largest firm has 65 accountants on the tax module. Most of CCH Tax firms (95 percent) are also using the CCH iFirm practice management suite.  

Larger firms are increasingly contacting CCH because they see the need to adopt a more tech-focused strategy, Wyner says. CCH is talking to top 50 accounting firms with multi-office sites in Australia, New Zealand and Singapore.

Below are screenshots from CCH iFirm Tax showing how it works.

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Depth on Tap

The mash-up of Master Tax Guide and the CCH iFirm Suite should increase the speed at which accountants can provide detailed advice. CCH has packaged this information in different ways; this makes it more accessible to accountants but also more expensive.

Take a firm that frequently has walk-in clients walks needing to do five years of tax returns, for example. iFirm has a separate module called CGT Reporter that will pull up the share history and capital gains changes for the past 30 years.

“If you have Westfield shares that have gone through a split there are huge implications,” Wyner says. “We can do that going back to the introduction of capital gains tax in 1985.”

The same information in the Master Tax Guide is also available as online videos for training staff. Wyner bills its CCH Learning video catalogue as “Netflix for accountants”. The video training marketplace Lynda might be a more accurate comparison.

Accountants pay a monthly subscription or buy on-demand videos on technical accounting, tax and soft skills, marketing and social media. Some videos come with a technical workpaper for practise.

CCH tracks the accountant’s viewing time and sends a certificate for the number of CPE hours watched. This could make it one of the cheapest ways to get CPE for Australian accountants.

(Separate story to follow.)

Claimed Savings

The Master Tax Guide integration is certainly a standout feature. It will be interesting to hear from accountants how much time this saves compared to getting up, pulling the guide off a shelf and flicking through to the right page.

More immediate and obvious savings come from the ability of CCH to update immediately its tax program whenever the Australian Taxation Office (ATO) releases new specifications. CCH will update urgent releases as soon as they happen, or otherwise overnight.  

This difference alone can save a firm hundreds of thousands of dollars in lost productivity. A recent customer of CCH Tax, a Sydney firm with 30 accountants, calculated it had written off $300,000 in the first six months of the financial year due to downtime updating its compliance system. “There are eight installs from the ATO in a year, one of which took them off the whole day. They couldn’t lodge tax returns, couldn’t view ledgers, couldn’t use their practice management,” Wyner says.

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