Legal consultant Claire Wivell Plater, managing director of The Fold, told ifa that the requirement – stipulated by Treasury in draft regulations released in February – is forcing practitioners to re-evaluate their approach to tax issues.
“The big implication of [the new requirement] is advisers have to really think about what tax advice they do give and whether they need to register,” she explained.
“Many advisers will be caught by that and need to be registered and given the obligations that go with it, I think advisers will need to almost make a decision about whether they’re in or they’re out.
“They’re either not going to give any tax advice at all – which is almost impossible to do – or they’ll have to become more adept at tax matters so that they can justify the cost of their registration.”
Wivell Plater said that many advisers currently provide general advice on tax matters and that a “sensible financial planner” always ensures their client gets proper tax advice on the implications of advice given.
In an upcoming article in ifa magazine, Dante De Gori, general manager, policy and conduct at the Financial Planning Association, writes that financial planners should continue to provide general tax advice as part of their services without having to be subject to TPB registration.
Offering the analogy of a GP offering general advice on posture without having to register as a physiotherapist, De Gori said “financial planners have provided tax advice within the context of financial advice to clients for many [years].”
De Gori said the TPB registration requirement would make financial planners “subject to regulation by a body that does not have experience in dealing with the financial planning industry”.
The Treasury draft regulations also proposed a requirement for “tax (financial product) advisers” to gain a qualification in taxation law.
The government is currently seeking submissions in response to the proposals.
Fiona
we can shoot bullets all day. I am both CPA and CFP–studied for both- not given. let me assure you there are as many ‘failures” in planning and tax matters, from both accountants and planners and I too have had to fix issues. Planners are from both camps-did you intend to insult CA’s and CPA’s as well because your use of the label FP covers all. Enough of the who is better, we all have specialities so lets work as a team and stop the rot. You know even those of us with many years experience can sometimes lose sight of the bigger picture, I think ego is the word.
Fiona, as a planner and credit adviser I have had to unwind poor fp advice provided by accountants esp in the smsf space. This is the reverse picture and the pending requirements for accountants to avoid asf licensing are equally lame.
Regulation is not a panacea, a true professional will recognise a complex scenario and recommend specialist tax advice from a CPA or maybe even a specialist tax barister. Similarly a good accountant will refer for fp specialist advice. Most of both professions are the “good guys [& gals]” but there will always be a few bad apples in the bottom of the barrel.
The government is really peed off with planners, making it tougher to give advice, and with FOFA introducing Civil penalties will make lawyers salivate, all dates back to the storm financial fiasco, pull out your cardigans and get a bowl hair cut, were all becoming accountants…
Most of the FP I know are NOT tax experts. How on earth does a 2/3 week course make one a tax expert? The old DFP module for TAX could be knocked over in a few weeks of diligent study.
For many folks with simple affairs a FP many just about know enough to get through, but as soon as there are any esoteric situation e.g. overseas pensions, family trusts and many others most FP would not know where to start.
And a good few accountants would struggle to boot. [b]BUT[/b] a CPA is liable for their advice whereas most fin plans have words that state it is not tax advice and the client should seek professional help.
WTF – why is a client paying upwards of $10k to be told ‘go speak to an accountant’. And that is why many SMSF involving small business owners would go to their accountant first.
For many folks FP [b]IS[/b] about the tax implications and to ignore this crazy.
Absolutely Rob and the problem, I think is that there are too many sales people out there who don’t understand even basic maths let alone tax – when you see someone recommend margin loans at a total cost of around 14.5%- they didnt have the sense to add up each item of cost. Advice to transfer your holiday home into a SMSF – and not realise that a transfer is a sale and that CGT and stamp duty were payable and also now you have a non complying fund. I might be a bit strong but if you see what I see you also would feel what I feel. These people are fools and they damage the industry.
So then all comments surrounding this should be limited to the inexperienced and ill educated. Not what profession you represent. AND that is the core point to this. Our professional organisations have tried to take the high moral ground by pointing the finger at each other for the other constituents transgressions. Not a particularly savoury process.
Actually I’ve had 38 years experience and I doubt whether you’d have anywhere near the experience that I have had with litigating and fixing up the mess from the poor tax advice that some FP’s give – and I don’t mean all of you but tax advice is something that should be given by a specialist – and yes I am a specialist.
Fair go Fiona. A substantial number of us advisers have had 20+ years in the game and would run rings around the majority of accountants in tax knowledge in our own specialised fields. I say this having previously been an practicing accountant for 15 years in the tax compliance arena. Just because you have completed 3 years of study doent make you any where near prepared for the complexity of tax. Further 3 years in the field I would suggest is minimal experience.
and just what are they proposing – It took an accounting degree with a number of tax modules and 3 years of full time tax compliance work to gain a tax agents licence – what are they now proposing to give it to a financial planner who has done a 3 week diploma and gives poor advice and pays $500 ?? I think not!!