Grey area of accountants in advice needs ‘urgent remediation’

In its pre-budget submission to the government, the SMSF Association said that one of its major concerns was the lack of a legislative solution to remedy the misalignment between the provision of accounting and tax agent services, and financial advice.

“There is also a need for a fit-for-purpose licensing regime for qualified accountants. The limited licensing model is a dying model,” it stated.

“It is not fit for purpose and most accountants, regardless of their qualifications, are unable to enter the advice regime due to the operation of the professional year.”

Furthermore, it said qualified accountants have a role to play in helping to fill the advice gap that exists between financial advisers and the proposed advice regime that will apply to APRA-regulated superannuation funds.

“This vital middle ground has been overlooked throughout the Quality of Advice Review and financial advice reform agenda that has followed despite the recommendations of the James Review, and the progress of other James Review recommendations through the government’s current policy agenda,” the submission said.

Of particular importance was the accessibility of advice surrounding the proposed commencement for Division 296 tax on 1 July 2025 and the need for many clients to obtain crucial advice applicable to their SMSF.

“Not all clients who wish to seek financial advice will have access to a licensed financial adviser and accountants will have a vital role to play in addressing crucial structuring and tax-related matters in assisting their clients,” it said.

“The grey line that exists between what constitutes the provision of a tax agent service and financial advice therefore needs urgent remediation.”

SMSFA chief executive Peter Burgess said that that a law change is needed regarding the deductibility of financial advice fees to “ensure equitable treatment applies to members of SMSFs and to align them with the underlying policy intent”.

“The proposed reforms seek to improve the deductibility of personal financial advice fees relating to a member’s superannuation account from that interest and related amendments will also seek to enhance the tax deductibility of those fees within the fund, but the superannuation law does not provide an equivalent measure for SMSFs,” the submission added.

Specifically, the submission argued that the gap in treatment would create a divide between APRA fund members and SMSF members.

“When we compare the pair, one group of members can elect to have the superannuation account pay for the financial advice that relates to their interest in the fund, the others are prohibited from doing so,” it said.

“This also will exclude SMSF members from availing of the tax deductibility of certain advice fees as proposed.”