Many tax agent and accounting industry representative bodies, including Tax & Super Australia (TSA), have been pushing for the re-instatement of the accountants’ exemption (see TSA’s submission to the Royal Commission here).
But it seems that any discussion on the matter, let alone reaching any decision, is not going to occur any time soon. The government recently indicated that any options in regard to modifications to the limited licence regime will not be considered until after the outcomes of the Royal Commission are made known — at this stage expected by February 2019.
Take-up of limited licences has so far been well below previous expectations, although it’s impossible to be certain that this may have stemmed from practitioners waiting for a more favourable outcome, such as bringing back the accountant’s exemption.
Some guidance at least
For accountants and SMSF professionals who may be feeling tentative about what “advice” they can or can’t provide, there is some guidance available in the form of an “information sheet” provided by ASIC. Its “INFO 216” (here is a link to it) discusses a range of exemptions that have persisted since the repeal of the accountants’ exemption after 1 July 2016.
ASIC’s information sheet states that SMSF services provided by accountants generally fall into one of three categories:
- “traditional” accountant services – for example, preparation and lodgement of tax returns, which are not regulated as financial services
- financial product advice relating to SMSFs – this is a financial service that requires the provider to be covered by an AFS licence
- exempt SMSF financial services – an AFS licence is not required to provide these services, as they are either not a financial service or they are covered by a licensing exemption.
ASIC says that generally the exemptions will apply if the financial service happens to be an integral part of or incidental to another type of service typically provided by an accountant – that is, you would reasonably need to provide the exempt SMSF financial service in order to carry out your normal accounting practice.
However in some cases, ASIC states that a practitioner might still be required to meet other requirements, such as providing clients with warnings. To help, it has provided a snapshot of the types of advice or services that may be provided to SMSF clients, and what may or may not need to be covered by an AFS licence.
SMSF services and the AFS licensing regime
|Type of SMSF service||What you may do without being covered by an AFS licence||Relevant legislation|
|Establishing, operating, structuring or valuing an SMSF, including advice and assistance on administrative and operational issues, and the process of winding up or exiting an SMSF||You may provide advice on establishing, operating, structuring or valuing an SMSF, as long as you give your client the appropriate warnings. This includes:
You may not recommend that your client acquires or disposes of an interest in an SMSF.
For further information, see Establishing, operating, structuring or valuing an SMSF.
|Asset allocation and investment strategy||You may provide a recommendation or statement of opinion on how your client should distribute their available funds among different categories of investments.
You may not advise your client to make particular investments through the SMSF.
For further information, see Asset allocation and investment strategy.
|Tax advice on SMSFs and other financial products||You may provide tax advice on financial products, such as an interest in an SMSF and underlying investments held by the SMSF, as long as you do not receive a benefit as a result of your client acquiring a financial product (or a financial product that falls within the class of products) mentioned in the advice and you give your client the appropriate warnings.
For further information, see Tax advice on SMSFs and other financial products.
|Tax agent and BAS services||If you are a registered tax agent or BAS agent, you may provide advice that is given in the ordinary course of the activities of such an agent and that is reasonably regarded as a necessary part of those activities.||Section 766B(5)(c)|
|Referring clients to an AFS licensee or representative||You may refer clients on to an AFS licensee or representative for financial product advice, as long as you make the appropriate disclosures.
For further information, see Referring clients to an AFS licensee or representative.