While it is possible for unlicensed accountants to provide clients with an estimate of the tax result of different scenarios that could arise depending on how they choose to apply the relief, often the SMSF client is looking for a definite answer on what they should do, Merit Wealth accountants services director David Moss told SMSF Adviser.
“For an accountant that’s not licenced, they have to say, ‘Well here are the options – if you’re in a segregated super fund, you’ve got these choices; if you’re in an unsegregated super fund, then you can do this or that, or alternatively you cannot apply the relief at all,” he explained.
There are a range of other elements impacting on the decision or tax outcome in addition to this, he said, including how much the client has in the super fund, whether the CGT relief is to be applied for a TRIS, if they plan to enter pension mode soon, or when they plan to sell certain assets or investments.
“If an accountant lays out all those different options to the client, some clients may say, ‘Thanks very much, I’ll make up my own mind based on the information’, but most clients don’t go to an accountant to be told, ‘Here are the options – go and work it out’,” he said.
“Most clients just need someone to tell them what to do. They just want to trust someone, and they just want to follow instructions.”
Simply providing factual information on the CGT relief, Mr Moss said, could therefore jeopardise the relationship the accountant has with their client.
At the same time, Mr Moss said providing advice in this area is very complicated and the accounting firm could be exposed to compliance risks by doing so.
“If you give the client wrong advice on this CGT relief, you’re then exposed, and it’s so complicated that it is easy for people to get this wrong,” he said.
Mr Moss said it’s very important that unlicenced accountants tread carefully in this area and consider getting a second opinion on any advice they plan to give the client.
“I myself would not go to the client with an answer without bouncing it off someone else because it’s just too complicated and error may cost a lot of money for someone, and it’s all happening at the same time as these licensing changes,” he said.
“So clients could get the wrong advice, lose a lot of money, while ASIC is out there looking for unlicenced accountants providing illegal advice.”
Liam is bang on. I have spent more time in the two weeks completing SMSF strategy advice WITH the clients accountant than talking to trustees. This will happen later. The trustee is unaware of the complexity of the issues, most of the accountants appreciate the array of estate planning issues only after I have raised them. I have proposed tax strategies but we have agreed the accountant will provide this advice. The accountants have contributed on tax and other matters, all to the client benefit. Not everything is about tax, especially in this case.
I do agree the accounting licensing coinciding with these super amendments are ridiculous however if you end up with better team based advice improving client outcomes than would otherwise have happened then maybe the clients will benefit despite professional frustrations.
This is surely the most important thing is it not?
“So clients could get the wrong advice, lose a lot of money, while ASIC is out there looking for unlicenced accountants providing illegal advice”
Of course, no client ever lost money because a financial planner gave wrong or poor advice!
Mr Moss again attacks unlicensed accountants accusing them of unethical or illegal behaviour. His baseless accusations are becoming a bit tiresome, particularly when a large part of his article seems to attack them for doing what they are legally allowed to do.
This is just getting silly. Why are financial planners allowed to use this whole tax (financial) adviser accreditation AT ALL- the ones I work with got it automatically under some kind of transitional provision and not one of them is capable of producing any kind of tax calculation in an excel spreadsheet – they are entirely reliant on the information that the SOA comes up with – this is entirely dependent on the data input to whatever software is used to produce it and believe me that is not always right. I have had several clients ask me for advice and have had to say no, they have rung up planners who want to charge ongoing service fees etc…all they want is to know about tax advice, don’t WANT FP advice – why should the consumer be forced to pay for things that they don’t want or need!!!
THIS WHOLE SYSTEM HAS BECOME FARCICAL. REGISTERED TAX AGENTS UNABLE TO PROVIDE TAX ADVICE? SUGGEST THERE WILL BE MANY OPTING TO LEAVE THE PROFESSION. IN TIME IT WILL BE VERY HARD TO GET A QUALIFIED TAX AGENT. THEY WILL ALL BE TAX (FINANCIAL) ADVISORS BECAUSE THIS IS WHERE THE BIG-BUCKS WILL BE. COMMONSENSE GONE BUREAUCRATIC AND THE FUTURE PENSIONER OF AUSTRALIA ARE FOOTING THE BILL!
We are having a lot of joint meetings now with our accounting partners so the clients get the best service and both of us are protected in terms of financial advice and tax advice. Works great and often find issues neither of us would have considered had we not worked as a team in the meeting.