Australia's tax profession 'confronting a structural crisis', warns The Tax Institute

The Tax Institute’s State of Tax Education in Australia report warns that the accounting profession faces a “structural crisis”, with fewer professionals entering the profession and demand for tax professionals rising following tax changes in the budget.

The report stated that fewer secondary school students are engaging with accounting, university enrolments in accounting and commerce are declining, and a large cohort of experienced practitioners are approaching retirement age.

As a result, demand for taxation professionals will continue to outstrip supply, and shortages are likely to persist, the report warned.

Accounting enrolments in universities have declined significantly over the past six years, with domestic accounting program completions falling 50 per cent from 2019 to 2024.

Data from the Department of Education also indicates that 71 per cent of accounting program enrolments in 2024 were from overseas students.

The report warned that heavy reliance on overseas students as the primary source of accounting graduates could create structural vulnerability in the pipeline, as many will return home after graduating and those who remain may not enter the Australian tax practice system.

The report also highlighted that not all accounting graduates enter the tax profession, with only a fraction of completions translating into a supply of taxation professionals.

While enrolments in accounting programs have partially recovered from the pandemic, the report noted they are still well below the 2019 peak levels.

At the same time, a large proportion of tax agents are close to retirement, with 32 per cent now aged 60 or over.

The report also found that the education that’s being provided to tax professionals is not equipping practitioners for the realities of tax practice.

When tax professionals were asked whether their university education prepared them for a career in tax, 72 per cent said university study did not adequately prepare them for a tax career. In comparison, 18 per cent said their university education provided no preparation whatsoever for their tax career. Only 7 per cent felt university study completely prepared them for their tax career.

Employer insights also reflected a skills gap, with 82 per cent saying that new professionals entering their organisation were underprepared for a career in tax.

“The convergence between self-assessments and employer assessments suggests the skills gap is both real and widely perceived. Seasoned practitioners are observing the same capability deficit in the people joining their teams,” the report said.

“When read alongside the declining secondary school and university pipeline data, this finding suggests that the profession is receiving fewer new entrants who are also less prepared than their predecessors.”

The Tax Institute academic director, Dr Sharon Smulders, said the report showed that not only is there a shortage of people entering the tax profession, but mainstream secondary and tertiary education institutions aren’t set up to teach the very specific technical knowledge a good tax adviser needs.

“Employers are competing to engage a shrinking pool of emerging professionals, then needing to invest in further training,” she said.

“It means that replacing tax and accounting staff as they retire or move into other careers is a slow process that can’t stand up to the demand for excellent tax advice.”

The Tax Institute said that professional tax education spanning formal postgraduate qualifications, professional designations, and short-form micro-credentials is one of the levers that the profession could use to address the ongoing skills shortage.

“The implications of the supply shortage are clear: in a market where new supply is constrained and existing practitioners are ageing, the only viable strategy for maintaining team capability is investing in the development of new and early to mid-career professionals.”