CPA-Australia urges tax adviser backdating plus 2032 sunset

Mike Taylor

Managing Editor/Publisher, Financial Newswire

10 May 2023

Major accounting group, CPA Australia wants the Government to back-date elements of its ‘experienced pathway’ legislation to 1 January, 2022, to accommodate financial advisers who are registered tax agents.

At the same time, the big accounting group is urging a sunset date for the ‘experienced pathway’ of 1 January, 2032, arguing that “this ensures that the community’s growing advice needs can be met in the short-term, while maintaining the commitment to greater professionalism by the sector”.

In a submission responding to the Government’s exposure draft legislation, CPA Australia said it supports the proposed new law which would ensure financial advisers who are also registered tax agents are not required to meet additional education requirements to be a qualified tax relevant provider.

“These amendments address the current inequity in the policy settings, which saw financial advisers who were registered as tax (financial) advisers provided automatic deeming provisions to the FAR [Financial Adviser Register] under previous reforms,” the CPA Australia submission said. “Those financial advisers who are a registered tax agent did not benefit from these automatic deeming provisions.”

“However, the amendments should commence on 1 January 2022 to align with the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Act 2021. This is to ensure regulatory consistency and to legally recognise that during the period 1 January 2022 to when the new law commences, financial advisers who are registered tax agents can provide tax(financial) advice to service their clients.”

The CPA Australia submission also raised the question of how advisers re-entering the profession should be treated, particularly those coming in via the experienced provider pathway.

“Encouraging those who may have left because of the education reforms, to re-enter the profession, could help address the short-term financial advice gap. However, we are concerned that there are no additional obligations for such individuals to re-enter, to ensure currency of knowledge relevant to the financial advice they will be authorised to provide to future clients. We believe this poses a potential client risk, given that the only other education obligation is to complete the standard financial adviser exam,” it said.

“To address this risk, we recommend that an individual who has been unlicensed for more than 12 months must undertake 20 hours of continuing professional development (CPD) relevant to their areas of authorisation in the immediate six months before being re-authorised under an Australian Financial Services (AFS) licence.”

“Finally, while the Bill is silent on how the experienced provider pathway may be recorded on the Financial Adviser Register (FAR), we would caution against any specific reference to ‘experienced financial adviser’ being used. This, or like terms, may not only be potentially misleading to users of the FAR, but it could also create division within the sector between financial advisers who may have been eligible to pursue the experienced provider pathway but elected to complete all required bridging units, and those who utilised the pathway provisions.”