Planners fail to access tax scheme settlement
TheFinancial Planning Association(FPA) has failed to convince theAustralian Taxation Office(ATO) that planners who advised clients to invest in mass marketed tax schemes should be entitled to the same settlement offer regarding the repayment of tax deductions.
The settlement offer, which was announced by the ATO in February, ruled that investors were required to hand back the tax deductions they received from investing in tax effective schemes, but were no longer required to pay penalties and interest on those deductions.
In a letter to the FPA, ATO first assistant commissioner Des Maloney rebuffed the Association’s arguments that financial planners should be considered in the same light as other tax payers when it came to the schemes.
The FPA had argued that advisers who had not been charged with any wrongdoing, and had invested their own monies in the schemes, should have the same access as other investors to the settlement offer.
“Your suggestion that the settlement terms for a particular taxpayer should be determined by whether or not the taxpayer has or has not been charged with any wrong doing by the licensing authority is, with respect, misplaced.”
Maloney says excluding financial planners “from automatic entitlement to the benefits of the mass marketed settlement offer” is in line with the September 2001 report of the Senate Economics References Committee.
The report stated that “investors will be deemed eligible unless they [are] tax advisers, financial planners and tax agents”.
The ATO also maintains its position of hearing financial planners requests to be included in the settlement terms only on a case-by-case basis, which it says is “consistent with the recommendation of the Senate Committee”.
But even then, financial planners will be expected to mount a strong case. All signals coming from the ATO indicate that it will exclude from the offer all planners who invested in the schemes themselves, but also profited by recommending the tax schemes to their clients.
Recommended for you
Licensing regulation should prioritise consumer outcomes over institutional convenience, according to Assured Support, and the compliance firm has suggested an alternative framework to the “licensed and self-licensed” model.
The chair of the Platinum Capital listed investment company admits the vehicle “is at a crossroads” in its 31-year history, with both L1 Capital and Wilson Asset Management bidding to take over its investment management.
AMP has settled on two court proceedings: one class action which affected superannuation members and a second regarding insurer policies.
With a large group of advisers expecting to exit before the 2026 education deadline, an industry expert shares how these practices can best prepare themselves for sale to compete in a “buyer’s market”.
