Advisers facing tax ultimatum

Sweeping proposals requiring financial planners who provide tax advice to register with the Tax Practitioners Board will force them to make a stark choice about their service offering, a financial services regulation lawyer has warned.

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.

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