FPA attacks ATO on double standards
The Financial Planning Association has hit out at the Australian Tax Office over what it says are double standards in regards to Alienation of Personal Services Income (APSI).
The FPA has accused the ATO of unfairly treating financial planners after it agreed to exempt medical practitioners who bulk bill, from the 80/20 rule and unrelated clients tests.
These state that if more than 80 per cent of a businesses income comes from one source then the income is classed as personal and subject to the APSI tax laws.
However the ATO stated that while medical practitioners receive payment which is passed through the Medicare system, the funds actually come from individual patients.
It said based on this medical practitioners were not alienating income, were running a personal services business and need not seek determinations.
Yet it is this same type of look through provision that the FPA has been discussing with the ATO in a bid to get it applied to the financial planning industry according to FPA chief executive Ken Breakspear.
He says in making the xemption the ATO hasc recognised the Medicare system is a method of payment and not a client of the practitioner and is similar to the model in use within the financial planning industry.
"Instead of Medicare, financial planners receive their income from clients through the dealer group system. This system is forced upon legitimate small businesses because of existing Corporations Law requirements," he says.
"This double standard is indicative of the ATO's attitude throughout the negotiation process. In its pursuit of additional revenue, the ATO has steadfastly refused to take a reasonable and fair approach to the concerns of the FPA," says Mr Breakspear.
The FPA sent the ATO a "please explain" earlier this week but has yet to receive a response.
The FPA has also been in contact with the Prime Minister's office and has already begun to work with them on the issue but Breakspear says the FPA will appeal the move and ask it to show its commitment to small business and provide the same provision for financial planners.
AUTHOR
Jason Spits
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