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Accountant Exemption

Accountant Exemption – accountants to face ‘onslaught of disruption’

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.

Fwgs continues to conduct RG146 training sessions and consult on licensing solutions around the country. Not one of the participants or their firms intend to apply for a license because of the cost, the complexity and the direct client liability.

If you would like to discuss the most appropriate solution for your firm please contact or call u

Most accountants still unprepared for new licensing regime (RG146)

SMSFAdviser Magazine December 4th

It is apparent that accountants need to take a breather over Christmas and research their strategy to deal with the accounting exemption expiry.

The enquiry to our office has been significant in the past fortnight and our RG146 training is booked out for January. Registrations for our February 2nd and 3rd 2-day course are also very strong with only a couple of places left.

The following article appeared in the SMSFAdviser magazine on Friday, 04 December 2015 and highlights the realities challenging accounting firms around the country.

New research suggests close to three quarters of accountants are yet to choose or action their licensing path for when the accountants’ exemption is phased out in June next year.

Despite the ASIC deadline looming, 72 per cent of accountants have not to date pursued their options for offering SMSF advice to clients after the 1 July 2016 exemption phase-out, according to a recent survey of accountants conducted by Perpetual Private.

The findings of a survey mirror the most recent figures provided by ASIC regarding the total number of applications received by the regulator – a mere 204 as of November 2015.

Dermot Lindsay, national manager for alliance partners at Perpetual Private, urged accountants to choose their licensing path before 2015 draws to a close, or risk running into serious business hurdles in the new year.

“In order to meet this deadline, you really need to start planning now,” Mr Lindsay said.

“Preparation for the change, no matter which path you choose, can take several months. It’s important to recognise if you don’t get the wheels in motion by the end of the year, you’re going to face serious challenges in 2016.”

Perpetual’s warning comes after ASIC indicated that those licence applications not received by 1 March 2016 might not be assessed before the exemption end date.

In response to the staggering number of rejected licensing applications (101 as of November), Mr Lindsay reiterated the importance of thorough preparation before applying.

“Accountants should be clear about the authorisations they require and have completed the right RG146 training. It’s also important to check the adequacy of your professional indemnity insurance,” he said.

“Ideally, all compliance procedures should be in place before you apply for your licence, or they certainly need to be by the time your licence is issued.”

How does Trowbridge impact on Accountants’ Revenue?

Finance Wise Global Securities Pty Ltd (fwgs) has a unique referral offer for accountants. Fwgs offers 20% of the upfront income received and 20% of the ongoing trail.  However, will this be sustainable a mere two years after the accounting exemption expires?

Last Friday, the government handed down its final report on the Life Insurance Framework.  Many of the changes, which have been welcomed by the majority of the industry associations, are positive for our industry and will bring improvements for advisers in terms of clawbacks and commissions.

Say a premium is $200 per month or $2400pa. This premium includes stamp duty which is excluded from commissions paid.  Thus, if the insurer paid 100% of the upfront, then the accountant will receive $470 upfront and $47pa.

From July 2018 this reduces to $282 but the ongoing benefit will be higher. So this is still acceptable for the accountant – but  what about the adviser? The adviser was earning $1,880 but, from 2018, it’s $1128.

That is a significant haircut and entirely unsustainable. My prediction is an exodus of ‘Lifeys’ and increased fixed dealer fees for those remaining advisers. Advisers will then charge additional fees for service and this will exacerbate the massive underinsurance problem in Australia and result in further change.

Key points from the government’s report, include:

1. Clawbacks reduced from three years to two years 

If the policy lapses in the first year, 100% of the premium will be clawed back. If the policy lapses in the second year, 60% of the first year’s premium will be clawed back.

2. Premium only excludes government taxes Commission is to be paid on premium which includes policy fees, modal loadings and CPI increases. The only exclusion is government taxes.

3. Transitional arrangements

From 1 July 2016: maximum total upfront commission of 80% of the premium in the first year of the policy. From 1 July 2017: maximum total upfront commission of 70% of the premium in the first year of the policy. From 1 July 2018: maximum total upfront commission of 60% of the premium in the first year of the policy.