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SMSF Accountants Exemption

ASIC warns of ‘significant risk’ with licensing (RG146)

As the time moves inexorably to the accounting exemption deadline finance wise is expecting to be rather busy in early 2016. James Barger-Bos, the CEO of finance wise global securities, remains optimistic but does have some concerns. Finance wise offer a unique web based software solution for accountants to enable them to manage the new advice environment with little impact on their current businesses.

“We have developed a two day face to face RG146 course for accountants and we bring the training to a suburb where there are a cluster of firms interested. Every firm should be interested but the common complaint is that they don’t have enough time to manage their own practice let alone take on additional training and manage the ASIC responsibilities.”

This is reflected in the following article sourced from SMSF Adviser (September 17th) written by Katarina Taurian.

At the end of August, ASIC had received only 161 applications for the limited licence.

“This number is very low if you consider the number of accountants who are likely to rely on the exemption,” said ASIC senior manager Trevor Clarke at the Chartered Accountants Australia and New Zealand National SMSF Conference on the Gold Coast earlier this week.

Of that 161, 70 have been approved, seven are currently under assessment and 82 have been withdrawn by the applicant because they had supplied insufficient information.

One applicant converted from a limited to a full licence, and “interestingly”, one application had an offer withdrawn after information surfaced that was not originally disclosed to ASIC, Mr Clarke said.

Some of the common issues that ASIC has seen in applications include insufficient evidence of training course completion, failure to include critical mandatory financial information, and failure to provide evidence of adequate professional indemnity insurance, Mr Clarke said.

“If issues can be rectified easily, we will give the applicant the chance to do so. However, if it can’t, we will give the applicant the option of withdrawing the application so they can attend to the issue,” he said.

Mr Clarke also expressed concern about those accountants who have yet to lodge their limited licence applications.

“Those who delay lodging their application until soon before June 2016 may very well find themselves unable to advise on SMSFs for a period of time until we finalise the assessment of the application,” Mr Clarke said.

“If we receive an influx of applications, depending on the numbers, processing the applications may take several months.

“We encouraged accountants applying to do so by 1 March 2016. This date is not mandatory, but if you lodge it past this date, you are facing significant risk that the application will not be assessed before 30 June [2016],” he said.

To register for the accountants RG146 course and enquire about licensing send an email to info@fwgs.net.au or register online.

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Senate passes new legislation on LRBAs (RG146)

A critical component of the fwgs RG146 training course is the changing landscape of LRBA’s.

Our RG146 course offers a unique and current insight into this topic because fwgs has recently contracted on a new office and a related entity has been hard at work securing an LRBA to fund about 60% of the purchase.

We have been surprised at the level of credit expertise across a wide variety of lenders including a recent SMSF Award winning lender.

We were stunned that a lender took 10 working days to complete a credit submission when all of the information requested was provided on day 1. We were prepared to be patient as this particular lender’s variable rate is over 110 basis points lower than the next best.

However, this will put pressure on every other aspect of the purchase; not to mention that the subject to finance clause was due on the day that the lender submitted the application to their credit team.

As a reminder when borrowing – an SMSF is required to establish a custodian trust and there has been some confusion about whether the holding trust is a taxable entity in its own right.

The legislation passed both the House of Representatives and the Senate on 7 September and is now awaiting royal assent.

The bill states that for taxation purposes (i.e. income tax, capital gains tax and GST) trustees treat the arrangements as if the property is held directly via the super fund.

This tidies up the method used by accountants in practice, and as long as the fund is complying and the arrangement qualifies as a LRBA, the tax uncertainties have been addressed.

An unintended consequence is the sound argument to the proposition that loans that are more favourable to SMSFs and are made at less than commercial rates are in accordance with the SMSF and tax laws!   Of course all loans should be fully and properly documented between the parties to accord with the laws pertaining to SMSFs.   So low or no interest rate loans made by a related party (you or your family trust) to your SMSF to acquire one or a series of single acquirable assets is acceptable in view of this change in the law but it is vital to seek advice.

Our RG146 course is a two-day facilitator led training program. We understand the difficulty accountants have with time so our philosophy is that we come to the accountant. Our first RG146 course is being held in NSW on October 7 and 8 and costs $1,250.00. To register please send an email to info@fwgs.net.au

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Beware of Credit “hawking” risks, accountants told (RG146)

Article continued from yesterday …

Mr Lindsay added that “the challenge for accountants is to understand where those lines are, and to understand very clearly what they’re licensed to provide and what they’re licensed to be able to discuss”.

Ms Lumsden Kelly said accountants risk violating prohibitions in the Corporations Act by overstepping their advisory boundaries and spruiking products and services related to self-managed super funds which they are not licensed for.

“It’s strictly a Corporations Act requirement,” she said. “This requirement has never applied to them [accountants) in the past so it’s essentially a new requirement that’s going to apply to them once they obtain a limited licence, or even if they choose to become an authorised representative of another licensee.”

However, the lines are blurred when determining whether advice is solicited or unsolicited, noted Ms Lumsden Kelly.

“I think that’s where the accountants are more likely to fall afoul of hawking – it’s less clear,” she said. “Has the client made a positive request? What was it that actually triggered that request, and was it reasonable in the context of the conversation that was being had?”

The “alarming” lack of accountants obtaining licences has resulted in a failure to address any post-licensing compliance obligations, according to Ms Lumsden Kelly.

“It is something that should be in a set of standard policies and procedures that an accountant implements into their practice, but the degree to which that is done effectively in the mad scramble to get a licence is questionable,” she added.

An ASIC crackdown could result in problems for accountants who fail to properly educate themselves about their new obligations, she said.

“If there’s a high level of ignorance about the obligation, which we are obviously at risk of because of the time pressures, there is scope for it to be breached a lot,” she concluded.

Our RG146 course is a two-day facilitator lead training program. We understand the difficulty accountants have with time so our philosophy is that we come to the accountant. Our first RG146 course is being held in NSW on October 7 and 8 and costs $1,250.00. To register please send an email to info@fwgs.net.au

Source: SMSF Adviser Written by Mitchell Turner Monday, 14 September 2015

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