Advisers risk being misaligned with timing of education standards

The proposed section 921D of the Corporations Act aligns in part with the current Tax Agent Services Regulations 2009 (TASR 2009) education requirements for tax (financial) advisers. Both include requirements for the completion of an approved qualification.

The association noted the bill will, in its current form, result in groups of advisers being excluded due to a lack of other transitional measures.

“The implementation of the FASEA education standards has seen the approval of courses that include taxation as part of their curriculum. In time, this will align the FASEA education standards and those required for a tax (financial) adviser,” SMSF Association CEO John Maroney said.

“It is, however, essential that any relevant providers (financial advisers) who are required to complete an approved qualification (in part or full) or bridging courses under the transitional arrangements for FASEA, can still meet the requisite education and approval (and renewal) standards as a tax (financial) adviser.

“There will be relevant providers (or advisers) who will be negatively impacted under these proposed changes due to a misalignment in the timing of the requisite education standards.”

The reason is renewals that occur with ASIC from 1 January 2022 will be required to satisfy the new education standards which are expressly limited to registrants who hold an approved qualification in taxation.

However, for advisers meeting their broader education requirements under the transitional provisions for FASEA, Mr Maroney noted the education standards must be met by no later than 1 January 2026.

“TASR 2009 Schedule 2, Part 3 Division 1 item 304 provided for an adviser who did not hold the requisite qualifications but had a prescribed period of experience and held a voting membership with an approved professional association (or body) to have met the requirements for authorisation,” he noted.

“The FASEA education standards will over time bring all advisers into the approved tertiary or diploma or higher award education standard. This aligns with the education standards set out in TASR 2009 Schedule 2, Part 3 Division 1.

“There needs to be recognition for those advisers who qualified under TASR 2009 Schedule 2, Part 3 Division 1 item 304 and are currently completing their FASEA education pathways. There will also be advisers whose TPB registration will cease prior to 1 January 2026 who would have not yet wholly met the education requirements.”

Mr Maroney suggested an interim, transitional measure should be included to ensure that these advisers, who are appropriately registered under the regime at that time, and who are actively working towards completing their education, which include subjects in addition to taxation, can continue to be registered as tax (financial) advisers.

“To be clear, an appropriate taxation course would need to be met by 1 January 2026 to ensure compliance with the new tax financial advice requirements under the Corporations Act and compliance with adviser education standards,” he said.

He also noted that the TPB previously published a summary table of TASR 2009 Schedule 2, Part 3 Division 1 clearly setting out the different pathways for registration.

“The proposed s.921H allows for the minister to make legislative instruments for relevant providers (advisers) who provide tax (financial) advice services. It is referenced in the requirement for the adviser to have completed a specified degree, qualification, or course, undertaken specified work and training, and ongoing professional development,” Mr Maroney explained.

“This is a duplication of existing education and training standards in s.921B(2) along with the work already undertaken by FASEA in approving various degrees and courses.

“As previously discussed, the FASEA education standards require the completion of taxation subjects. These include taxation law, finance and business law subjects as defined by the TPB. The SMSFA is of the opinion that it is difficult to separate financial product and strategic advice from taxation advice. Each of these are intrinsically linked.

“Consideration should therefore be given to the phasing out of a separate designation. This will further alleviate some of the existing red tape that applies to financial advisers. It also takes into account the existing legislative requirements and the current work that is being done within the sector and by advisers to meet the new education standards.”