FPA makes headway on alienation
The Financial Planning Association has secured a partial victory in its ongoing struggle with the Federal Government and the Australian Tax Office (ATO) regarding the Alienation of Personal Services Income (APSI) legislation.
FPA policy manager Con Hristoduolidis says the ATO had approached the FPA after a number of meetings and said it would recognise the current structures through which planners operated.
He says this was important because it allowed planners to sidestep what has become known as the "mismatch issue" in the legislation and allow planners to apply for personal services business determinations.
The mismatch issue is caused by the current Corporations Law forcing planners to hold a proper authority as a natural person, with most working within a corporate structure, typically their own practice.
However, the ATO states that as a natural person any income derived within the practice is wholly that of the planner and is covered by personal services income rules and taxed accordingly.
According to Hristoduolidis the ATO would recognise the current status of planners but under the provision that the Financial Services Reform Bill (FSRB) was passed by June 1st of this year and proper authorities will move from being held by natural persons to a corporate structure.
"We are working on expanding these provisions and are asking for a longer timeframe that takes into consideration the two year period during which the FSRB will be introduced," Hristoduolidis says.
The FPA was still in talks with the ATO as well as the Prime Ministers office about the unrelated clients rule in which the ATO states a planner's income comes from the dealer and not clients, thus also subjecting planners to personal services income taxation.
However Hristoduolidis says the FPA is confident it is making headway and is expecting a response from the Prime Minister's office this week.
AUTHOR
Jason Spits
Recommended for you
ASIC has launched court proceedings against the responsible entity of three managed investment schemes with around 600 retail investors.
There is a gap in the market for Australian advisers to help individuals with succession planning as the country has been noted by Capital Group for being overly “hands off” around inheritances.
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
Having peaked at more than 40 per cent growth since the first M&A bid, Insignia Financial shares have returned to earth six months later as the company awaits a final decision from CC Capital.
