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The Financial Planning Association (FPA) is addressing concerns that uncertainty about the Tax Agents Services Act 2009 — which is intended to govern and raise the standards of the provision of tax agent services — might result in additional licensing requirements for financial planners.
FPA deputy chief executive Deen Sanders said this is a genuine concern, because under the Corporations Act financial planners are required to discuss the taxation implications of a financial product. However, the new Tax Agents Services Act is very broad in its reach, which could mean planners have to register under the new regime. This could also mean higher education and experience standards.
“There is ambiguity in the act, and that is certainly the issue that we are concerned about. We want to make sure that the information is clarified for our members,” Sanders said. “We’re working with the Taxation Practitioners Board, as well as the Assistant Treasurer [Nick Sherry]. These discussions are ongoing, and something we are engaged in daily.”
Sanders said it was likely the issue would be resolved because the Treasurer had indicated in the past that bringing financial planners under the licensing regime was not the intention.
“We are just seeking clarification about the way the Act is applied and practiced by the Taxation Practitioners Board,” he added.
Townsends Business & Corporate Lawyers has advised that in the meantime, principals of Australian Financial Services Licensees (AFSLs) must prevent any client misunderstanding when it comes to considering tax in the advice process.
“Townsends recommends that AFSL compliance teams consider what may need to be changed or may need to be more closely defined in a Statement of Advice,” said the principal, Peter Townsend.
Dylan Byrne, tax partner at accounting and advisory practice BDO Australia, said this issue resounds with the situation where additional requirements were imposed on tax agents following the Financial Services Reform regime, which limited many tax specialists from giving investment advice.
“I suspect that this is starting to happen a little bit in reverse. It will be interesting to see whether it will end up as a bit of a mirror image of what the tax agents can and can’t do,” Byrne said.
