AIST backs tax advice reform
The Australian Institute of Superannuation Trustees (AIST) has taken a largely sympathetic approach to an option within a Treasury options paper to alter the Australian Financial Services Licence (AFSL) regime so that planners providing tax agent services would be regulated similarly to how tax agents are regulated by the Tax Practitioner’s Board.
The first option within the Treasury paper, ‘Regulation on tax agent services provided by financial planners’, was that tax agent services provided by financial planners would remain within the Tax Agent Services regime — provided that this imposed minimal additional compliance burdens on them.
The AIST submission stressed that any regulatory changes should only apply to planners providing direct tax advice (as opposed to indirect or incidental tax advice) and highlighted the fact that the Australian Securities and Investments Commission (ASIC) already oversaw limited or incidental tax advice provided by planners.
In supporting their preferred option, the AIST’s professional standards and compliance analyst, Richard Webb, said the institute was mindful that additional regulation could make financial advice more costly and that this, in turn, could compromise financial literacy of Australia’s superannuation fund members.
“We certainly don’t want to see a situation where advisers who simply mention the word ‘tax’ are forced to meet tax agent eligibility and undergo costly training requirements,” Webb said.
These extra costs could potentially compromise the financial literacy of Australia’s superannuation fund members, according to the submission.
“We have stressed to Treasury that a clearer distinction needs to be drawn between incidental/indirect tax advice and direct tax advice to ensure that uncertainties are minimal,” Webb said.
The AIST was confident that there was already sufficient regulation by ASIC of indirect tax advice provided as part of most financial advice, Webb said.
“In any event, if incidental tax information contained in financial advice must be regulated further, our preference would be for this to be the domain of the same regulator [ASIC] as the advice itself.”
The AIST submission also highlighted flaws within the options paper itself, which the AIST said contained several incorrect assumptions.
These include drawing incorrect conclusions from examples regarding licensees providing tax agent services, as well as the belief that there was no specific regulator focus on the taxation implications of advice provided by financial planners — a belief the AIST considers to be incorrect.
The AIST submission said it was regrettable that the options paper stated that all financial planners provide tax agent services and therefore must be regulated within the tax agent services environment.
“We believe this should be reviewed as it appears to be founded on an assumption that all advisers offer the same services,” the submission read.
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