Accountants are not into recommending the establishment of self-managed superannuation funds (SMSFs) for the purpose of benefiting from the fee income stream, according to the InstituteofChartered AccountantsinAustralia.
In a submission to the Federal Government dealing with the structure of the SMSF sector, the institute said suggestions that the accounting profession is recommending SMSFs on the basis of the resultant fee income stream was not supported by the available data.
“This is not supported by the number of SMSFs when compared to the number of high-net-worth individuals who receive tax advice or the number of small businesses,” the submission said.
“In particular, this does not correspond with the recent history of SMSFs, which could be freely recommended by accountants without any consideration of the Corporations Act advice restrictions prior to 2004, when the Financial Services Reform amendments were introduced.”
The submission argued that clarification was required of research which indicated that the accountant was the adviser for a client, when in fact the accountant may well have been the first point of contact and simply referred the client to an in-house financial planner.
However, the institute’s submission acknowledges that the provision of advice with respect to SMSFs represents a key issue, particularly the exemption granted to accountants working in the area.
“There is no doubt that much has been made of the accountant’s exemption and its practical application,” the submission said. “The institute recognises that there is a need to resolve this issue for the betterment of its members, the public and industry as a whole.”