The Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) have united behind a bid to defer the application of the Tax Agent Services Act (TASA) to financial advisers. In independent submissions to Treasury, both industry bodies have called for a six to twelve month extension to the proposed start date of July 1.
Financial planners providing tax advice within the context of financial advice were initially exempted from TASA 2009, with industry bodies arguing they should be permanently excluded from an act that was not designed to regulate them.
The present deferral arrangement for financial planners is due to expire on June 30, but questions on implementation remain, with many in the industry totally unprepared for the change.
“Should this measure proceed, the Bill is likely to only be passed by Parliament in late June, and there are still regulations and guidance documents required by both the Tax Practitioners Board (TPB) and the Australian Securities and Investments Commission (ASIC) that would need to be released,” argues Dante De Gori in the FPA’s submission to Treasury.
“We strongly recommend that the government consider extending the deferral arrangement of TASA to financial planners for another six to twelve months. This will support and provide scope for industry in implementing other significant legislative changes such as the Future of Financial Advice (FoFA) reforms and Stronger Super (including MySuper) reforms.”
De Gori believes any extension of the deferral period can be worked into the transition period. For example, the notification period could be shortened from 18 months to six months to accommodate the new start date.
Time frame impractical
Philip Anderson, AFA chief operating officer, said he has two main areas of concern around the timing.
“On one hand there is the issue that the carve-out from TASA for financial advisers expires on July 1, 2013 and on the other hand there is the fact that with less than four months to go, this is only draft legislation and high level detail in terms of the regulations,” he said.
“July 1, 2013 is the same timing as the commencement of the FoFA obligations, so it will be very difficult for advisers to place the necessary focus on their TASA obligations. We believe that this time frame is impractical.
“We recommend that the application of TASA to financial advisers should be deferred for six to twelve months. We are conscious that there is a notification period, however important obligations apply during this period.
“A delay in the start date does not need to mean that the commencement of the full application on June 30, 2016 needs to be deferred. Either the notification phase or both transitional phases could be reduced.”
The AFA also questioned the intent of deeming all registrations during the notification phase to be effective from July 1, 2013.
“Are there deeper implications from this, including treating advisers as being subject to the code and required to hold PI prior to their actual date of notification?” asked Anderson.
For its part, the FPA has concerns with the definition of financial planning being defined in TASA when it is not even defined in the Corporations Act.
“There are still pending legislative amendments to the Corporations Act on enshrinement of the terms financial planner and financial adviser as part of the FoFA reforms,” said De Gori.
“The absence in coordination and consideration of this issue has been both alarming and disappointing.”
