The registration of financial advisers as tax financial advisers (TFA) with the Tax Practitioners Board (TPB) should be automatic, unless they opt-0ut, Treasury has recommended as part of its review of the operations of the Board.
The final report of the Independent Review of the Tax Practitioners Board made the recommendation as part of a review of tax services and financial advice, drawing upon an option presented in a discussion paper released in August 2019.
“The review’s discussion paper proposed the following: ASIC (Australian Securities and Investments Commission) and the TPB operate as co-regulators of financial advisers and the TPB is responsible for the imposition of sanctions for tax-related matters,” the final report stated.
“This is also the review’s preferred model, subject to some modification”, it continued, noting while registration as a TFA would automatically attach to all financial advisers, any who do not provide tax advice could opt out of the TPB regime.
It said this co-regulatory model should not be introduced until the implementation of the government’s planned single disciplinary body in 2021 and until that time the current regulatory models should remain in place.
Advantages of the proposed model are that it would remove the need for financial advisers to register twice with the disciplinary body and any action involving the provision of tax advice would be decided by qualified experts from the tax profession.
Additionally, TFAs would only be required to comply with the Financial Adviser Standards and Ethics Authority Code of Ethics, and not the Code of Professional Conduct in the Tax Agents Services Act 2009 as well.
The review also considered restoring the exemption that allowed accountants to provide basic SMSF advice and services without having to operate in the Australian financial services licence environment, but did not make a recommendation towards that end, instead suggesting the government take a closer look at the issue.
“Having recommended the regulatory burden on TFAs is to be reduced, the review believes it is reasonable that a similar level playing field should be considered for accountants,” it said.
“The review therefore recommends the government initiate a specific review of what advice accountants can and cannot give in respect of superannuation and which accountants that might apply to. Such a review could perhaps be undertaken by the Productivity Commission.”
The review has been welcomed by the government, which stated it supports the recommendations regarding financial advisers in principle.
In its response to the review, it stated it agreed regulatory overlap should be reduced and pointed to its planned single disciplinary body, which will cover all financial advisers, including TFAs.
The Financial Planning Association (FPA) also welcomed the review’s recommendation regarding advisers and the implementation of the new model in 2021.
“This is not the first time the FPA has highlighted the need to reduce complexity for advisers, as outlined in the policy platform,” FPA chief executive Dante De Gori said.
“The FPA acknowledges the government’s support to improve the effectiveness of the TPB as part of the process of establishing a new central disciplinary body by the end of 2020. The FPA looks forward to engaging with the government to develop a functional model for implementation in 2021.”
