Treasury has listed restoring the accountants’ exemption and allowing financial advisers to provide incidental tax advice without being registered with the Tax Practitioners Board as potential options for a new regulatory model in its discussion paper.
Following an initial round of consultation as part of the government’s independent review into the effectiveness of the Tax Practitioners Board, Treasury has released a discussion paper highlighting the key considerations that will be taken into account by the review.
One of the areas that will be explored in the review, according to the discussion paper, is how the requirements set by the Financial Adviser Standards and Ethics Authority (FASEA) differ and conflict with those of the Tax Practitioners Board.
“This review is ideally placed to suggest ways to reduce the regulatory duplication,” the paper stated.
The discussion paper noted that based on the submissions received in the initial consultation, bringing tax financial advisers within the TPB regulatory regime has created a significant regulatory burden.
“In addition to the ATO and TPB, FASEA, ASIC and AFCA all have roles to play. One submission noted that some of their members are subject to four existing Codes of Ethics and that will become five with FASEA’s Code of Ethics commencing on 1 January 2020,” it stated.
“Any new model needs to be more streamlined, less complex and without the duplication of the current regime.”
In the paper, Treasury has outlined seven possible options for a new model for disciplining financial advisers based on the consultation.
One of these options is to allow financial advisers that provide incidental tax advice to not have to be registered with the TPB.
Treasury stated this option would mean reciprocal arrangements that permit tax advisers and accountants to provide incidental financial advice which in effect restores the concession that was previously available to accountants that are registered tax practitioners.
“This option would bring back the accountants’ exemption and allow accountants to provide basic SMSF advice and services without having to operate in the AFSL environment,” it explained.
Another option listed is for ASIC to operate as a ‘one stop shop’ for the regulation of financial advice and tax advice, where the TPB has no direct role in the regulation of financial advisers.
One of the other options listed was for ASIC and the TPB operate as co-regulators of financial advisers where the TPB is responsible for the imposition of sanctions for tax related matters.
With this option, TPB registration as a TFA would automatically attach to all financial advisers, who can then ‘opt out’ of the TPB regime if they do not provide tax advice, the paper explained.
Alternatively, this could operate as an opt in model instead, the paper said, where TPB registration as a TFA attaches to all financial advisers that ‘opt in’ to the TPB regime if they provide tax advice.
These proposals follow SMSF Adviser’s extensive coverage on the wildly unpopular phase-out of the accountants exemption, the regulatory headaches the limited licence has created since the onset of new education standards, the ongoing lobby to have the limited licence reinstated from service providers and associations alike, and longstanding predictions that the regulatory environment as it stands would be restructured.
Treasury has invited feedback to the discussion paper up until 30 August 2019. You can have your say here.
Ok accountants – honestly ask yourselves and your trusted buddies if you previously overstepped the very limited advice that only allowed you to Open or Close a SMSF under the old exemption ? About 98% had overstepped I guesstimate.
Seriously it was so badly overstepped Accountants generally thought they could give whatever SMSF advice they liked with zero AFSL compliance.
Many advice points that weren’t covered under the old exemption that Accountants regularly abused. 1) specific contribution advice 2) Rollover Advice ( that often included loss of existing Life Insurances 3) Setting up Pensions, bucket loads of them 4) Pension reversionary or non reversionary nominations 5) Death benefit nominations by the truck load when setting up SMSF, etc etc
Great, Open season for financial planners to give masses of illegal taxation advice which is often incorrect due to their lack of taxation qualifications and experience
And in turn Michael Mann, open season for many accountants to give illegal personal financial and investment advice, which in many cases has been completely inappropriate for clients….more so in the SMSF space. Plenty of evidence of that, but it does not get reported as falls below the media and regulatory radar
I saw today in the New Daily (an industry fund paid for newsletter) that they are now comparing the pair – SMSFs v Industry Funds and warning the ATO may take action against 17,700 SMSFs with property. At the end of the day anything to protect and grow SMSFs is the key. A Treasury proposal for all interested parties is a great start. Industry super will be lobbying hard against any return to the accountant’s exemption of course.
Not good news, although financial advisers should have to be at a very minimum degree qualified and should have to work in a tax practice for at least five years prior to providing any taxation advice.
Same of course should apply in relation to accountants – need to meet the FASEA qualifications. Tax is pretty simple, it’s what Google is for.
Reduce Advice Regulation. Your lot require massive over the top, red tape tangle of providing real AFSL compliant advice as your profession is not held in a positive light due to your past actions and behavior.
No Reduce Advice Regulation, it is financial planners that are generally provide recalcitrant, immoral advice.
Generally speaking accountants are a trusted adviser and are generally honest and professional in their dealings with their clients. Most of our clients are terrified of financial planners. Other accountants also inform us that their clients hold financial planners in a very low regard.
I put it to you the only reason most of your clients would be ‘terrified of financial planners is because you have pedaled and fostered that fear. Just remember, whilst SOME advisers (and no not most as the media love to report) have done the wrong thing, so have SOME accountants. This is evidenced by a CA that is principal of a Launceston accounting firm STEALING his clients tax returns as reported this week. Highly ethical stuff hey!
Helps when it is much harder to sue an accountant than take action against financial planners. I don’t know you (or want to know you) but I can guarantee you that accountants are no more trust worthy than used car salesmen or financial planners when times get tough. This is seen by the current level of illegal advice which is being provided that ASIC is ignoring.
Excellent news. Clients will be able to receive honest trust worthy advice from a qualified trusted adviser, the accountant. The exemption should have never been removed, It left Dracula in charge of the blood bank.
Accountants are trust worthy? I’ll introduce you to a few I know. They are currently able to give advice, they just need to be qualified and document it rather than stating its client directed.
About time some sense prevails – the removal of the accountants exemption was a major step backwards.
Bravo a thought bubble revisited.
Every time I visit my Tax Accountant and raise a matter that involves my Accounts and any future plan to Change direction in smallest way precludes my Accountant from answering. OH NO you need a financial advisor. As a retired CPA I see such restraint as a Joke!
About time they came to their senses…..
Open season floated again. Accountants can provide bucket loaned of Illegal AFSL advice again. WTF ?
Accountants have somewhat stepped back from the masses of Illegal AFSL advice provided under the way over abused accountants exemption and now Treasury want to green light Illegal AFSL advice again.
Treasury, how about reduce the massive over the top, red tape tangle of providing real AFSL compliant advice so we can all provide it more efficiently.
Accountants are continually rated as the most trusted advisers. The removal of the accountants exemption meant those that needed the advice the most were no longer able to access it. It astounds me the amount of poor/incorrect/incomplete advice clients were receiving by paying for so called “real AFSL compliant advice”!
I cannot properly address you because you have not left a name but I have to ask: why the anger? Why not find a solution rather than keep focusing on the problem. And please don’t tell me that AFSL holders are snow white and innocent of wrongdoing.
And what about all the decent professionals out there with ethics that provided their clients with good advice?? How many clients have been affected having to pay unnecessary fees to simply get some information about their options? Under the current rules clients can’t even get information on options without their accountant having to provide a ‘recommendation’ or being directed to an ATO webpage to decipher themselves.
Accountants have always had training in finance and financial markets as part of their Bachelor degrees. This is re-inforced through our tax law training when doing the CAANZ and CPA programs. Pre the removal of the accountants exemption, any decent accountant did continue to keep their investment knowledge up to date by working closely with financial advisers. Without knowledge of the investment structure, and corporate actions we cannot possibly provide appropriate taxation advice.
Seems like a sensible proposal. For both sides of the accounting/advice equation. What’s the bet the big egos who came up with the idea in the first place will knock it on the head before it goes any further.
Good news!!. Some common sense seems to return to the world!!