On 22 October 2012, as a part of the Mid-Year Economic and Fiscal Outlook measures, the Treasurer announced that financial planners who provide tax advice will be subject to the requirements of the Tax Agent Services Act 2009 (Cth) (TASA).
The changes provide that financial planners who offer tax advice will be required to meet certain education and experience requirements and a fitness and propriety test, and will be required to follow an industry code of conduct. These requirements are to be introduced over a three-year period, commencing on 1 July 2013.
The government has released a Regulation Impact Statement which provides options for a new regulatory framework for financial advisers providing tax advice, to ensure they are appropriately regulated. Those options are:
- implementing a co-regulatory model – to streamline regulation of financial advisers to ensure that the provision of tax advice is consistently regulated
- extending the TASA exemption for financial advisers indefinitely – so that financial advisers would be able to provide tax advice without needing to comply with the TASA requirements, or
- maintaining the status quo – when the TASA exemption expires on 30 June 2013, financial advisers will need to comply with all the requirements of the TASA regime from 1 July 2013.
Under the co-regulatory model, financial advisers who would be subject to the co-regulatory framework are those who can:
- provide tax advice in the context of providing personal financial advice for a fee or other reward, but not to the extent they lodge tax returns or make representations to the Commissioner of Taxation
- provide personal financial product advice which includes tax advice that can be relied on by consumers, or
- advise clients as part of their job, profession or business in exchange for a fee (directly or indirectly) or any other reward or remuneration.
Financial advisers who would not be subject to the co-regulatory framework are those who:
- provide only general tax information and not tax advice tailored to a client’s circumstances, or
- provide tax agent services, such as lodging tax returns and making representations to the Commissioner of Taxation, as they are currently required to be regulated by the existing TASA framework and therefore they are (or should be) registered tax agents.
The government will undertake further consultation on proposed legislation and regulatory amendments and seek to ensure that the legislation and regulations are introduced before the changes will take effect on 1 July 2013.