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.
