In a paper written in conjunction with law firm Holley Nethercote, Licensing for Accountants chief executive Kath Bowler said ASIC has only provided guidance on one of the two taxation advice exemptions in Information Sheet 216, and it remains unclear how the potentially broader exemption in S766(B)(5)(c) applies.
“[Also], the way in which regulation 7.1.29(4) has been interpreted does not treat accountants fairly. It effectively provides a broader exemption to those that are not licensed then those that are licensed,” explained Ms Bowler.
“Licensed or authorised accountants cannot rely on the tax advice exemption in 7.1.29(4), and instead must provide licensed advice that requires an SOA for exactly the same advice.”
A lot of accountants made the decision to become licensed, she said, so that they could expand their services beyond the available exemptions.
“It was not expected that they would lose the benefit of exemptions available to unlicensed accountants,” she said.
Ms Bowler said she understands that ASIC will be issuing further guidance on s766B(5)(c) which covers the exemption relating to activities undertaken by tax agents.
“From our perspective it’s one of the most important pieces in the puzzle, so we’re keen to see that as soon as we can,” she said.
She also added that the current regulations under R7.1.29(5) unfairly benefit unlicensed accountants in relation to superannuation compliance activities.
“The drafters of the regulations seem to incorrectly assume that licensed accountants want to replace the super compliance exemption with the ability to provide broader advice to their clients,” she said.
“Licensed accountants want to have the ability to offer a range of services from compliance through to strategic advice, depending on the needs of the client, rather than only being able to offer a broader service that at times is not appropriate, or even necessary.”
Some of the accounting firms with dedicated superannuation divisions, she said, have taken the responsible step of becoming licensed.
“However, they are now required to refer basic super compliance work to an unlicensed accountant if they wish to take advantage of the exemption,” she said.
“The experts in the firm are then only able to deal with the smaller proportion of clients that want advice.”
These difficulties and oversights or over assumptions by ASIC just go to show the absurdity of treating an entity, a trust, being a SMSF as a product, and not the investments within as being the product.
It is no wonder that some accountants I meet are carrying on their businesses with respect to SMSF’s as business as usual with no concern for the need to be licenses. The $1.6m transfer balance Cap (TBC) is a good example, where some accountants (unlicensed) are either not educating their clients on the need to have pensions under $1.6m from 1 July 2017 and completing the financials and tax returns for 2016/17 in some cases with excess pension balance. With the ATO then issuing an excess contribution assessment, some time in the future. However, some accountants (un-licenses) take it upon themselves to commute the existing client pensions and raise new pensions as at 30 June 2017 to ensure the clients are under the TBC of $1.6m.
Do you have an proof of these allegations or are you just making them up?
I have personally spoken to numerous accountants who have advised me they are either going to simply do everything as no advice (ie) client directed and therefore don’t need to be licensed and at least one which has taken the really stupid step of being licensed and not giving SOA’s. At least with the first approach you can raise an argument, even if it is a stupid one. I haven’t reported them to ASIC because I know them personally and I also have absolutely no faith in ASIC to take any action in this area.