Are there any restrictions on a financial planner providing tax advice when advising a client?

[David Court]

Financial planners are currently able to include tax advice when advising a client, as long as:

• They are an authorised representative of an AFSL holder; and
• Their advice is accompanied by a statement that they are not a registered tax agent and the client should request advice from a registered tax agent if they intend to rely on the advice to satisfy obligations or claim entitlements under taxation laws.

Of course, any included taxation advice would still be subject to the general conduct and disclosure obligations (such as the laws pertaining to misleading and deceptive conduct) applying to the provision of financial product advice under the Corporations Act 2001.

There has been increasing tension in recent times over the regulation of the provision of financial advice and taxation advice. It is difficult in practice for a financial planner to provide financial advice without considering taxation implications and for a tax agent to provide tax planning advice without considering the types of financial products to use as structuring vehicles.

Historically, each area has had its own system of regulation. But there has been increasing overlap due to the broadening of the reach of each regulatory system through the introduction of the Financial Services Reform and the Tax Agents Services laws.

Until 30 June 2012 the overlap has been resolved (at least in so far as financial planners are concerned) by exempting financial planners from the Tax Agent Services laws subject to the conditions set out above. After that time it is intended that financial planners will need to obtain some form of tax advice authorisation and meet competency requirements before being able to provide tax advice. Supervision of these requirements will be through the Australian Securities and Investments Commission (ASIC). However, specific details of the scope of tax services that can be provided and the competency requirements are being considered by a working party composed of representatives from Government agencies and professional bodies.

(This Q&A also featured in the 19 May 2011 edition of Money Management)

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