How TASA will affect financial planners

Financial planners may have won something of a victory in terms of TASA implementation, but the Financial Services Council’s Cecilia Storniolo writes that those impacted should ensure they have a good understanding of how, precisely, they will now be affected. 

Financial advisers have largely been prohibited from giving tax advice to date. But the Tax Agent Services Act (TASA) changes all that. 

By now, TASA will be on your radar and you will know the new regime is set to impact the ‘tax advice’ you give. But the details of TASA and what has changed after a few drama-filled weeks in Canberra are less clear.  

Here is a re-cap of where the bill landed. 

Inquiry – or not to inquire 

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The bill was originally tabled in Parliament on Wednesday, 29 May 2013. It was subsequently referred to a House Standing Committee on Economics for inquiry. 

The industry welcomed the chance to present to a Parliamentary Committee due to concerns about critical aspects of the bill which would significantly impact advisers.

However, on Friday, 31 May 2013, the ALP members of the Committee voted that the bill be urgently returned to the House of Representatives for a vote without inquiry.   

With the prospect of the bill’s passage and a 1 July 2013 commencement date which would see most Australian Financial Services Licensees (AFSLs) and their representatives in breach of disclosure requirements on day one, the industry was galvanised and descended on Canberra.

This resulted in a rushed sitting of the Parliamentary Joint Committee (PJC) on Corporations and Financial Services on 12 June which reported to Parliament on 17 June 2013. 

While the PJC Report recommended the bill be returned to the House and pass without amendment, the Opposition succeeded in negotiating a number of changes. 

The amended Bill was tabled and passed in the House of Representatives on 20 June and in the Senate on Friday 28 June 2013. The situation now is that: 

1. TASA is now contained in a bill called the Tax Laws Amendment (2013 Measures No. 3) Bill 2013; 
2. The Government has issued the industry another one-year extension from TASA 2009 to 1 July 2014. 
3. The bill’s new start date is also 1 July 2014, with a three-year transition to 1 July 2017. 

Do you give tax (financial) advice services?  

But you don’t give tax advice – you say. TASA changes that. The TASA Bill says if you: 

• Are an AFSL or a representative of an AFSL; and 
• You give advice which interprets tax law (to the client’s circumstances and/or has regard for your client’s liabilities, obligations, entitlements which could arise under tax law); and 
• The recipient can reasonably be expected to rely on the advice; and 
• A fee was paid for the advice,  

then you have provided a tax (financial) advice service and TASA will apply to you. 

Now TASA is law and from 1 July 2014, you will need to address: 

1. Amending disclosure 

You may need to amend any tax advice warnings you use to ensure you are using the correct warning from 1 July 2014. 

If you are a registered tax agent, you do not need to use a warning. 

However, if the advice you provide falls under the category of ‘tax (financial) advice services’ you will need to use a TASA prescribed warning until you notify or register with the Tax Board.

If you never register but operate under a supervisory model, reference to the AFSL being a registered tax agent may be required. 

2. When to transition into the new regime 

During the first 18 months − in the ‘notification’ period – only AFSLs and authorised representatives may ‘notify’ the Tax Board (akin to registration).

A representative of an AFSL may register during the second 18-month period of the three-year transition.

Please note that once you have notified or registered with the Tax Board, you must also comply with the Tax Board’s Code of Professional Conduct. 

Professional Indemnity Insurance (PII) is a key obligation of this regime. If nothing changes in terms of the advice you provide, speak to your PII provider to ensure the paperwork you need to provide to the Tax Board, as evidence does not create a policy upgrade situation. 

3. Competency and experience:  

If you have determined that you need to become a tax (financial) advice services provider, you must ensure your formal education and experience meet with Tax Board’s requirements (which are yet to be finalised).

You will not need to meet competency/experience requirements within the three-year transition period. 

Treasury is currently consulting with the industry on competency requirements. Note that Tax Board competency requirements are currently, potentially, additional to any that ASIC may set under RG146.

The industry is working with the Tax Board to ensure competency training is not duplicated and that credit for training already undertaken is considered, albeit on a case-by-case scenario. 

Finally, the Government has announced it will consult with the industry on which services should be exempted from the regime by way of regulation.  

Cecilia Storniolo is senior policy manager – advice for the Financial Services Council.