Tax provision may send advisers back to school

Financial advisers who provide clients with tax advice, including noting tax implications when accessing superannuation, will soon need to complete a course devised by the Tax Practitioners Board (TPB).

While the application of the Tax Agent Services Act 2009 (TASA) to financial planners is pending but still far from resolved, the TPB has wasted little time in producing a draft on how financial advisers might be regulated.

On June 30, the deferral of TASA will expire and the act will apply to financial planners. With Parliament not sitting again until budget time in May, this exposure draft is likely only to be passed in late June.

And there are still regulations and guidance documents required by both the TPB and the Australian Securities and Investments Commission (ASIC), which then need to be consulted on and released.

A matter of course

The TSB has started the ball rolling with the release of an exposure draft: Proposed Guideline TPB(PG) D04/2013 Course in Australian taxation law that is approved by the Board for tax (financial product) advisers.

This draft sets out the preliminary views of the TPB in relation to what an approved course in Australian taxation law for tax (financial product) advisers would entail.

It includes information relating to the following aspects of a course: topics and learning outcomes, duration, course providers, education level, manner of delivery, assessment and currency.

“The Tax Agent Services Act 2009 (TASA) is designed to ‘…ensure that tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct’. It is therefore both necessary and desirable, in certain respects, to increase the expectation of the thoroughness of education and training that a registered tax (financial product) adviser should have when compared with the expectations under the regulatory regime of the Corporations Act 2001 before July 1, 2013,” says the introduction to the exposure draft.

“The board recognises that a balance must be struck between what is reasonably achievable within the modern educational and professional paradigm, and assuring the public of high professional standards. In doing so, regard has been had to the educational qualifications, and the types of providers of training and education recognised within the Australian Qualifications Framework (AQF).”

A recent poll conducted by Professional Planner found 80 per cent of financial advisers have been called upon to give clients specific tax advice at some point.

Ill considered?

Craig Meldrum, head of financial advice at Australian Unity Personal Financial Services Limited and a board member on the policy and regulation committee of the Financial Planning Association, recently voiced his concerns on these issues to Professional Planner.

“Most financial advisers who studied the eight units of a diploma of financial planning or an advanced diploma of financial services (financial planning) in order to achieve RG146 also did a 13-week unit devoted to taxation. They didn’t do this to become (or want to become) quasi-tax specialists or accountants, but so they understand the ramifications of incidental tax advice on the wealth creation and retirement strategies they implement to assist clients achieve financial goals and objectives,” he said.

“However, there is as yet no detail on how current qualifications and experience will be assessed. As a registered tax agent and chartered tax adviser servicing financial advisers (and accountants) as a technical services manager, I understand what level of tax knowledge advisers need to know. However, I’m not sure that ASIC and the TPB have considered this enough.”

To read the full TPB draft, click here.