SMSF advice firms and practitioners should be cautious about how they charge advice fees for work related to their own superannuation as it could be considered illegal early access, a technical specialist has warned.
MLC Tech Connect senior technical services manager Julie Steed noted illegal early access was a key error SMSF trustees and members should avoid, but in regards to advisers charging the member account of their own fund for work they have carried out, there was a lack of clarity and so a danger of breaching the rules.
“If we look at financial advice fees, very unhelpfully we don’t have any guidance from the ATO, but we have seen in all the non-arm’s-length income information that we have received that if accountants don’t charge a fee, then it’s non-arm’s-length income,” Steed said during an adviser briefing last week.
“So a word of warning for advice licensees, and this is something to check with your advisers, but since 2017, the Corporations Act 2001 was amended to say that all advice providers have to be an individual, so a natural person. In days gone by, my [Australian financial services] licensee used to be the responsible party, but now it is me as the individual adviser.
“At the same time, there is a legal view that you can’t charge yourself for something you already know. If it is in my head, then I know it and I can’t unknow it.
“So, if I was to charge myself an advice fee from my member’s account, then it’s likely to be considered illegal early access.
“As stated, very unhelpfully, there is no guidance from the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission or the ATO [on this issue], but as a result of the change many retail funds have prohibited advice fees coming out from advisers’ accounts since that change in 2017.”
