News

Accounting, Financial Planning

Accounting bodies cold on advice exemption return

limited advice exemption accountants

Two major accounting bodies have stated the limited advice exemption for accountants should not return and called for a wide review of the tax advice system.

Two major accounting bodies have stated they do not support a return to the accountants’ exemption as it was too limited and would not enable the provision of affordable advice.

Chartered Accountants Australia and New Zealand (CAANZ) and CPA Australia took the position as part of their joint submission to Treasury’s review of the Tax Practitioners Board (TPB), countering one of the options put forward by the department in a discussion paper.

In that paper, Treasury proposed a return to the previous accountants’ exemption alongside a suggestion financial advisers who provided incidental tax advice should not be registered with the TPB.

“We do not support this model. Tax is a key consideration for the majority of financial planning strategies. It is not incidental, it is material to the advice and recommendations,” the two bodies stated, adding consumers needed to be certain any financial advice they received had also fully considered their tax position.

The submission also pointed out a return to the accountants’ exemption would be a move to a very limited regime that only permitted the recommendation to establish or wind up an interest in an SMSF.

“It was so limited that it did not even permit a recommendation to not establish an SMSF,” it said.

“Restoring such a limited exemption is not going to address the need to enable affordable, accessible and quality advice by trusted advisers.

“Rather, significant review of the current regulatory framework is needed to address the current complex environment, which is resulting in increased costs and discouraging clients from seeking advice.”

“The current regulatory environment is a product of years of consistent change and layered regulatory amendments. The result is an inefficient advice model which negatively impacts clients’ access to affordable, quality advice from their choice of trusted adviser. A holistic review of the current regulatory framework, including the interaction between different regulatory regimes, is needed,” it said.

The joint position held by the two accounting bodies is at odds with that of the Institute of Public Accountants (IPA) and the Tax Institute, which have separately called for the reintroduction of an extended exemption related to SMSF advice only. The IPA and Tax Institute claimed a limited exemption would allow accountants to provide holistic advice to SMSF clients.

Copyright © SMS Magazine 2020

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital