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.”