As the accounting exemption expiry hangs over the industry like Damocles sword it appears that planners are listening to the regulators and responding in significant numbers while accountants continue to bury their heads in the sand. This article written by Miranda Brownlee on Thursday, 10 December 2015 appeared in the SMSF Adviser magazine.
One industry lawyer has warned accountants of the danger of complacency within the accounting industry, with the number of registered tax financial advisers fast approaching 17,000.
Speaking to SMSF Adviser, DBA Lawyers director Daniel Butler said the latest figures from the Tax Practitioners Board (TPB) indicate that at the end of September 2015, there were 16,743 registered tax (financial) advisers.
Mr Butler said this figure has grown from 16,329 registered tax (financial) advisers as of 30 June 2015.
The deadline for notifying the TPB of the intention to become a registered tax (financial) adviser is 31 December 2015.
According to the Tax Practitioners Board website, AFS licensees and authorised representatives who notify the TPB by this date will not need to pay an application fee. Individuals will not need to meet education and experience requirements and partnerships and companies will not need to meet the sufficient number requirement.
Registration as a tax (financial) adviser means an adviser will “have tax as an arrow in their quiver because it’s another angle they can compete on”, Mr Butler said.
“It certainly does position a financial planner much better with their client because they’re legally able to talk tax.”
While a financial planner may still face obstacles, in comparison with an accountant, in providing more sophisticated tax advice for businesses and individuals that hold complex trust structures, when it comes to giving tax advice to individuals, financial advisers can now be much more strongly positioned.
“A financial planner now has the capacity to talk tax; what they cannot do today is actually lodge a return, but it’s probably not going to be that hard for a financial planner to bring tax in-house, to then become a true competitor with the accountant,” Mr Butler said.
While both accountants and advisers have made “a move to the middle”, there are still only 78 approved limited AFS licence applications, based on the latest ASIC figures, he said.
It remains unclear how many accountants have become authorised representatives since there is no real data on this. However, on the figures alone, it appears financial advisers have been quicker in the uptake to gain a competitive strategic positioning, according to Mr Butler.
“A lot of traditional accountants are also suffering another onslaught, and that’s disruption,” he said.
“Even the ATO now does a lot more work on E-Tax so that it’s easier for an individual to lodge their tax return through the ATO and bypass a tax agent.”
This disruption is likely to take the traditional accountant who lodges individual tax returns out of the equation.
“There won’t be a great need for people to be lodging tax returns; the financial advisers can give rounded advice on investments and lifestyle decisions, and they can also give this tax advice,” he said.
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