It has now been just over two years since the accountants’ exemption was lifted and empirical evidence suggests that accountants are having to deal with increased costs and an onerous compliance regime with the cost hikes are being passed on to their clients.
The accountants’ exemption allowed the provision of limited advice by recognised accountants dealing with SMSFs, and was originally introduced as a part of the government’s future of financial advice (FOFA) reform which came into effect from 1 July 2012. At the time this was seen to be a common-sense approach to the issue.
Tax & Super Australia estimates that under the present regime, an accountant’s average cost of providing advice to clients is currently around $2,000. “Left unchecked, this will only lead to further increases in costs to the ever growing 600,000 SMSFs in Australia, currently costing SMSF trustees, self-funded retirees and many small business operators over $1.2 billion in additional fees that are unjustified and unsustainable”, says Tax & Super’s CEO Moti Kshirsagar.
The new AFSL licensing arrangement, which came into effect from 1 July 2016, has caught in its net numerous small accounting practices that participate in merely setting up and administering an SMSF. Accountants who are perfectly qualified to undertake these functions are withdrawing their services due to excessive compliance costs and highly cumbersome regulatory processes. Tax & Super Australia is gravely concerned that this phenomenon could result in substantially reduced competition, exacerbated by increased costs and fewer services.
In a submission to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Tax & Super Australia has called for the reinstatement of the accountants’ exemption.
“We’ve reached the point where regulation is hurting the people it aims to protect. In an attempt to target a minority of wrong doers, the government has got it wrong to impose a significantly higher cost burden on SMSFs and self-funded retirees. This overlooks the financial goals, retirement savings and financial well-being of ordinary Australians,” says Kshirsagar.
He has called upon other accounting bodies to stand-up for their members and support Tax & Super Australia on this critical issue that affects the accounting fraternity. “Tax & Super Australia’s vision is for a fair, efficient and cost-effective compliance system for all Australians,” he says.
Tax & Super Australia’s submission to the Royal Commission can be found here.