In its pre-budget submission, Chartered Accountants Australia and New Zealand (CA ANZ) has called for a review of the industry funding model (IFM) amid a broader push for streamlined regulation and greater transparency.
Financial services entities are “incurring spiralling compliance costs”, it said in the submission, pointing to the Australian Law Reform Commission’s proposals to reform Chapter 7 of the Corporations Act as one measure that has the “potential to reduce compliance costs and benefit the community including, for example, higher retirement benefits”.
However, it also said the government should task the Australian National Audit Office (ANAO) with reviewing the process used by ASIC to “calculate and allocate” the IFM, “particularly given the Productivity Commission’s recent report about industry levies”.
The Productivity Commission report CA ANZ is referring to, Towards Levyathan? Industry levies in Australia, was published in December 2023 and said that the rise of industry levies is creating an increasingly complex and inefficient tax system that risks limiting productivity growth.
According to the report, the number of these industry levies has increased from 26 to 248 since 1980 to become the “long tail” of Australia’s tax system, collecting less than 2 per cent of overall tax revenue.
“Without anyone noticing, these micro-taxes have compounded into a bureaucratic ‘Levyathan’. Limiting their growth in favour of more efficient taxes is a simple, actionable reform that could make a material difference to productivity growth,” said Productivity Commission deputy chair Dr Alex Robson.
“Taxes work best when they are simple and efficient – but many industry levies are relatively expensive to collect, unnecessarily distort business activity, and waste the time and resources of business and government,” Dr Robson added.
Tax deductibility of advice
The CA ANZ submission also said that tax deductibility rules for financial advice fees need to be “urgently reviewed”.
“It is effectively impossible for Australians to plan their financial future through the superannuation, taxation, age pension and aged care regulatory environments without seeking expert financial advice,” the submission said.
“As Australia’s population ages, it will be paramount that individuals can solve their retirement puzzle easily and simply. To enable this, legal complexities and inconsistencies need to be removed.”
Noting that there are “insufficient financial advisers”, which CA ANZ said is unlikely to change quickly enough despite the government’s response to the Quality of Advice Review (QAR), the submission pushed for a larger role for accountants to provide advice.
“Our members are highly trained and skilled and can assist, but the regulatory environment needs urgent reform to allow those in public practice to assist their clients with their everyday financial challenges,” it said.
It also recommended a review of financial adviser education standards and asked for more regulatory certainty for chartered accountants who are not licensed regarding the provision of financial advice.
