Many financial advisers are still none the wiser about why they have been caught up in the Tax Agent Service Act regime, according to the Association of Financial Advisers (AFA).
The AFA has used a submission to the Inspector General of Taxation’s Review of the Future of the Tax Profession to point out the degree to which confusion continues to surround the regime.
“The three-year transition period for registration with the Tax Practitioner’s Board (TPB) has now concluded and financial advisers are starting to go through the renewal process,” the submission said.
However, it said that despite the long lead time on this transition, “many of our members remain quite unclear on why they are caught in the TASA regime, when all that they do is provide incidental tax advice to clients”.
The AFA said the vast majority of its members were very careful about the provision of tax advice and recommended that their clients see an accountant on anything complex, if they were not already seeing an accountant.
“Financial advisers are not able to complete tax returns or represent clients with the Commissioner of Taxation,” the submission said but added that financial advisers could provide significant value helping clients plan and ensure their financial wellbeing through strategies including salary sacrificing into super, tax deductibility of income protection insurance premiums, taxation of insurance benefits, awareness of capital gains tax liability and planning for eligibility to the Age Pension.
It said that in order to fulfil their best interests obligations, financial advisers needed to have a complete understanding of their client’s entire financial affairs in order to provide advice that was tailored to their personal circumstances.
“Financial advisers have visibility of the financial investments that clients have through being the registered financial adviser on their client’s accounts. This enables them to have visibility of those investments through product provider systems and to provide regular reporting to their clients,” the AFA said.
“Another key part of the role of a financial adviser is to assist the client with cashflow management advice. Often clients have limited awareness of their own salary and investment income. It can often be a challenging exercise for advisers to obtain this information. In some cases, clients will give the adviser a hard copy of their previous tax returns,” it said.