CA ANZ superannuation and financial services leader Tony Negline said the way in which the law operates around advice creates an unfair environment for unlicensed advice.
Mr Negline says the existing framework is particularly ineffective where the advice required by the client encompasses both financial and taxation advice.
“A good example of this is the impending $3 million threshold tax for those with higher superannuation balances,” says Mr Negline.
The threshold, once operational, is expected to operate in a similar way to Division 293.
“So what will happen is the ATO will write to the individual and say here’s an assessment for this tax and then the individual has to say how they’d like to pay it. They can either choose to pay it through their superannuation fund or they can choose to pay it personally,” he states.
“People who are subject to this tax might ask their accountant about how they should pay it. Now an unlicensed accountant can’t really turn around and say ‘I think you should pay it through the super fund’ because that is recommending the partial disposal of a financial product.”
The upcoming $3 million threshold and Division 292 tax both demonstrate that the current advice environment doesn’t operate in a very efficient or effective way, according to Mr Negline.
“We want greater certainty for unlicensed accountants and a clear roadmap as to how the law will work,” he says.
Due to the current regulations, Mr Negline said clients seeking this kind of advice will be required to go see their financial adviser.
“If all I want is some relatively simple information or assistance on which entity should pay this tax, there may be [substantial] cost in getting that advice,” he says.
“It’s no wonder we have this great unmet advice need. Until this is all sorted out, this is going to remain an ulcer on the whole sector.”
Quality of Advice Review fails to deliver solution
Despite the substantial discussion about the issues impacting professionals, Mr Negline says the Quality of Advice Review didn’t really go far enough in terms of addressing some of the problems with the current framework.
“[During the review] we spoke about our members and other in the accounting profession and we pointed to a number of inconsistencies in the law as to how it operates and how it creates an unfair environment, especially for unlicensed accountants,” says Mr Negline.
“It’s also very expensive to become licensed. Unfortunately the final review didn’t go as far as we would have liked.”
The accounting body is still in discussions with Treasury and is hopeful the current government might be open to some ideas for improving the system.
“We have had further discussions with Treasury about all issues and we’re hopeful that the government will be a little bit more broad minded about these issues.”
