The FPA has urged Treasury to extend legal professional privilege to financial advisers, saying it is giving accountants a competitive advantage.
In its submission regarding the 2017-18 federal budget, the FPA said that LPP – the rule that protects communications between legal practitioners and clients from disclosure – was extended to accountants in the 1980s.
During that time, lobbying from the accounting sector argued that the ability for lawyers to claim LPP gave them a competitive advantage when providing taxation advice.
That exemption should be extended to financial planners as well, since they now fall under the registration and governance of the Tax Practitioners Board, the FPA said.
“While there is scope for the ATO to life the accountant’s exemption, there remains a competitive advantage with accountants having access to this exemption while financial planners do not,” the submission states.
“The FPA requests an interim measure that financial planners are included in the ATO’s self-imposed accountant’s exemption to ensure there is no commercial advantage where the same advice is being provided by the two different professions.”
The FPA also urged Treasury to make changes to the tax treatment of protection insurances.
The submissions states that life, TPD and income protection insurances each incur different tax treatment depending on the type of policy, how it was purchased, who purchased it and for what purpose.
“The FPA suggests that addressing the anomalies and complexities of the tax treatment of insurance would greatly assist in closing the protection gap,” the FPA said.
“Allowing tax deductibility of insurance premiums for non-super policies will add incentive for Australians to take out life insurances, reducing our documented under-insurance problem in Australia and consequently reducing reliance on government benefits when insurable events occur.”
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