According to ASIC, the update to Information Sheet 216 sets out some of basic principles in which tax and BAS agents can apply to understand whether their advice falls within the licensing exemption and provides examples to illustrate how the exemption works.
The guidance explains the relationship between the exemption in section 766B(5)(c) of the Corporations Act and the exemption for providing tax advice on financial products, which is regulation 7.1.29(4) of the Corporations Regulations.
Speaking to Accountants Daily, CPA Australia head of policy, Paul Drum said that the updated guidance provided clarity over what a tax agent was allowed to do.
“This is a good outcome for professional accountants who are also registered tax agents, as it confirms that they can provide tax agents services to their clients – even if they are authorised to provide financial product advice,” said Mr Drum.
“Previously ASIC had said if someone was licensed to provide financial product advice and also a registered tax agent, they could only provide tax agent services in areas they were not licensed to provide advice.
“It should be noted that ASIC have made it clear that the advice is limited to the tax implications and does not permit a recommendation. It is also important the client understands that tax is only one consideration when making a decision, which is important when considering superannuation or investments for example."
Likewise, Licensing for Accountants chief executive Kath Bowler told sister title SMSF Adviser that in earlier versions of information sheet 216, ASIC was completely silent on the tax agent’s exemption which created a lot of confusion under what advice they could provide under the tax agent's exemption.
“So you had this bizarre situation where different people within the accounting practice had to rely on tax advice differently,” Ms Bowler explained.
The guidance makes it clear she said that licensed accountants and authorised accountants can provide tax advice under the tax agent’s exemption.
“It's now consistent. So for an accountant who is a tax agent, which is almost all of them if they're in public practice, it's the same treatment whether they're licensed or unlicensed as to what they can give under that tax agent's exemption,” she said.
However, Mr Drum believes there are still some grey areas that appear to contradict exemption guidance.
“There is still some mixed messaging — as the information sheet still states that if you are covered by an AFS licence you can only rely on the exemption in Corporations Regulations 7.1.29(4) to provide tax advice on financial products that are not covered by an authorisation in your licence,” said Mr Drum.
“Given only registered tax agents and BAS agents can provide tax advice, this seems to be at odds with the interpretation under s766b(5)(c) they have stated outlined above.”