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Should planners link to accountants on tax?

Financial planning firms would do well to consider partnerships with accountancy firms to help deliver tax advice to high net worth individuals.

That is the assessment of GlobalData which has looked at the activity of the Australian Taxation Office (ATO) and its focus on high net worths.

GlobalData senior wealth management analyst, Heike van den Hoevel said that traditionally the ATO had relied on audit and review activity to uncover potential irregularities but had recently adopted a more focused approach.

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By the end of 2017, the ATO had already conducted 320 interviews, targeting those with among more than $350m in turnover or more than A$500m in net assets. According to the ATO's latest annual report, 77 cases with high net worth individuals were settled in 2016.

This number is likely to be higher in 2018, as greater emphasis is now placed on large and unusual transactions, the misuse of trusts, and lifestyles that do not match after-tax income. A further 1,200 interviews with individuals in lower asset bands are planned during the course of 2018.

“Out of the two thirds of wealth managers surveyed by GlobalData that do not offer tax advice, less than five per cent indicated that they are planning to offer this type of service over the coming two years,” he said.

“This is a lost opportunity, and wealth managers that lack the resources or in-house expertise will do well to consider partnerships with accountancy firms.”




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