TASA legislation passed by Parliament

Tax planning bookThe Tax Agent Services Act (TASA) legislation was passed by the House of Representatives recently.

Originally, the legislation proposed that all financial planners providing tax advice in the context of financial advice would need to register with the Tax Practitioners’ Board (TPB) from 1 July 2013. However, the legislation was unexpectedly amended before being passed and as a result, financial planners now have a 12-month extension before registration is required. There is also a 3-year transition period from 1 July 2014.

The financial planning industry are treating this as a big win because the Future of Financial Advice (FoFA) reforms are also scheduled to come into play from 1 July this year. Industry groups, most notably the Financial Planning Association of Australia (FPA), lobbied heavily for an extension to the TASA legislation on the basis that financial planners will already have to adapt to significant change under FoFA reforms. Additionally, the FPA argued that a 12-month extension was necessary because the government were rushing to get the legislation passed and had not undertaken adequate consultation (the government did not commission a parliamentary committee enquiry, for example).

However, let’s not get hung up on the timing and lose sight of the reforms. Bottom line? If financial planners want to provide tax-related financial planning advice to their clients from 2014, they will need to demonstrate sufficient skill, qualifications and experience to the TPB in order to do so.

Industry participants will argue that TASA will create additional complexities and red tape in an industry already suffering from compliance overkill and while they may be right, they’d be missing the point. The importance of tax planning strategy within the context of a financial plan cannot be overstated. Every recommendation in a financial plan has a tax consequence at some stage. It might be a consequence today, in 5 year’s time or upon death but regardless of timing, there will be a financial effect which should be accounted and planned for by a financial planner in a financial plan. To put it another way, it is simply not possible to properly advise a client without addressing the tax implications of financial planning recommendations.

Yes, the TASA legislation will probably mean financial planners have to jump through more hoops to keep doing what they’re already doing, but the knock-on effects will be increases to both education and experience requirements surrounding provision of tax advice by financial planners. Better quality financial advice for consumers? Absolutely.

This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax advice prior to acting on this information.Opinions constitute our judgement at the time of issue and are subject to change. Financial Planning Expert Pty Ltd does not give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.
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    Financial Planning Expert is an independent financial planning business based in Melbourne. We provide genuinely independent and conflict free financial advice. We’re experts in self-managed superannuation fund (SMSFs) advice and strategy, retirement planning, property and share investment advice, life and income protection insurance, tax planning, asset protection, estate planning and advice for Australian expatriates.