Minister for Financial Services and Superannuation Bill Shorten has called for industry feedback on proposed reforms to the regulation of the provision of tax advice by financial planners.
The paper, Regulation of Tax Agent Services provided by Financial Planners, highlights the gap within current regulatory arrangements which apply to financial planners who offer tax agent services.
At present the provision of financial advice is governed by ASIC, who administer Australian Financial Services Licences. However, tax agent services are regulated by the Tax Practitioners Board. The paper calls for one single approach to regulation and offers two potential options for consideration:
Option 1
- Bring tax agent services provided by financial planners permanently within the tax agent services regime and be regulated by the Tax Practitioners Board, but do so in a way that minimises any additional compliance burden.
Option 2
- Investigate and implement what changes, if any, might be made to the Australian Financial Services Licensing regime or its enforcement to ensure financial planners offering tax agent services are regulated to the same standards imposed on tax agents.
In March 2010, the Federal Government introduced the Tax Agent Services Regime to regulate the provision of taxation services. Tax advice provided by financial planners was deferred from the scope of the regime for 12 months, allowing for a reasonable consultation period with industry.
However, in November 2010, Minister Shorten pushed out the deadline for the application of the national regime to financial planners by a further three months – to July 2011. The release of the paper this week signals that the Treasury is now prepared to move on the issue.
“This options paper gives interested parties the opportunity to constructively engage in consultation with the Government on the best way to regulate tax agent services provided by financial planners,” said Minister Shorten.
“Feedback from industry and other stakeholders will significantly assist in developing the best regulatory option. I encourage interested parties to make a submission. We will also consult with specific industry spokespeople to arrive at the best possible solution,” he added.
In a statement released in November, the Institute of Chartered Accountants called for a swift resolution to the issue:
“Three months may not sound like a significant extension but we need to remember that by the time this issue is resolved, consumers will have waited more than two years for what we believe is a fairly straightforward policy decision,” said the Institute’s Tax Counsel, Yasser El-Ansary.
Mr El-Ansary said the interpretation of Australian taxation laws is such an integral component of financial planning advice that excluding planners fundamentally erodes the integrity of what the Tax Agent Services Regime is seeking to achieve – a higher standard of tax advisory services for the general public.
Copies of the options paper are available from the Treasury website and consultation closes on 25 December 2010.
