ACCOUNTANTS’ EXEMPTION REFORM
LIVE CHAT: QUESTIONS AND ANSWERS
INTRODUCTION
With less than five months before the accountants’ exemption is removed, there remains a level
of confusion about what is actually changing and the options to address the reform.
This live chat was held to help members understand their options if they are currently providing
SMSF establishment and related advice and still don’t know which solution is right for them.
The experts who addressed members’ questions were:
• Keddie Waller, Policy Adviser - Financial Planning, CPA Australia
• Peter Docherty, General Manager - Public Practice, CPA Australia
• Alisar Hosni, Manager - Public Practice Support Services, CPA Australia
RESOURCES
Resources are available to help you implement your chosen solution to address the reform.
QUESTIONS AND ANSWERS
Where do we stand as CPAs in a post 1 July 2016 era if a client has a SMSF and wishes to discuss insurance cover
via SMSF?
Regulation 7.1.29(3)(b) allows accountants to provide generic risk management advice that is not restricted to
merely business clients. This allows other clients, such as private individuals, to receive basic risk management
advice, including taking out insurance. The relief is restricted to the presence of a risk that a person may face and
does not allow the recommendation of advice about specific financial products, for example, those provided by a
particular issuer.
Further guidance can be found in Financial advice and Regulations: Guidance for the accounting profession.
Where do we stand as CPAs in a post 1 July 2016 era if a SMSF client brings to the accountant the financial
planners report/ statement of advice for comment regarding tax issues and meeting cash flow requirements?
Regulation 7.1.29(4) provides an exemption for when tax advice is being provided in relation to financial
products. It states that when giving advice about the taxation implications of financial products covered by the
Act, this is permissible so long as the adviser does not receive a benefit (other than the fee charged for such
advice) as a result of, for example, the client then investing in a financial product and provided certain disclosures
are made.
However, an accountant cannot provide comments or give an opinion on product recommendations given in a
financial plan that a client has bought to them for review. They can only comment on the taxation implications,
for example of making an investment.
The CPA guide states that accountants can’t recommend clients increase their employer contributions over and
above their SGC amount. However, the CPA guide makes no mention of whether an accountant can recommend to
a client after 30th June 2016 to make a personal concessional contribution (assuming they qualify to do so).
The accountants’ exemption currently permits a recognised accountant to recommend a client establish or wind
up an interest in an SMSF without being licensed under the AFS licensing regime. It does not permit an
accountant to make recommendations in respect of contributions. Therefore unlicensed an accountant cannot
provide a recommendation that a client make additional or voluntary contributions to a superannuation fund.
I currently operate a very small practice from home and probably set-up on average 1-2 SMSF's per year. I feel
that getting an AFS licence or becoming licensed through a third party organisation is not economically feasible
for me. However, if a client does ask me to set-up a SMSF for them after 1 July 2016, can I provide a disclaimer
document that says I'm not authorised to give any financial advice regarding the set-up but am only carrying out
the client wishes and they should seek their own advice on this matter?
ASIC is increasingly focusing on SMSF advice and services. It is highly likely that post 30 June 2016 ASIC will review
and question practices that frequently establish SMSFs as an ‘execution only’ service.
As a matter of best practice, CPA Australia recommend that where a member who is unlicensed is requested by a
client to set up a SMSF, that is provide an execution only service, the member recommends the client seek
licensed advice or refer the client to external resources first in order to assist the client validate their decision.
Appropriate resources would include ATO published resources including Thinking about self-managed super and
Self-Managed Superannuation Funds Trustee Education program.
If I have my own Limited AFSL licence can I access the CPA para-planners and software?
In time there will be the ability to leverage of services and support from CPA Australia Advice, however while this
is likely to include para planning services it is unlikely to extend to software.
What would be considered financial advice? Would a statement along the lines of the following be acceptable "Your personal tax rate is at 46%, if investment and contributions made in SMSF the tax rate would be 15%. You
think about whether you could save some tax by having an SMSF or a strategy making use of SMSF. Of course
there are other factors you should take into account such as money put into SMSF will be locked away till
retirement and changes in future law that could impact on SMSF....etc.” and finish off by saying, “You should seek
financial advice for this as I am not licensed to provide financial advice.”
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Tax advice may not be used as a pretext for providing financial product advice. Therefore the advice must relate
to the taxation consequences (and related issues) but should not be used to recommend particular financial
product.
Regulation 7.1.29(4) specifically requires a written disclaimer be provided if the tax advice is financial product
advice, i.e. it is given in relation to a financial product.
Requirement for RG 146 states that: "Until 30 June 2016 a recognised accountant who holds a public practice
certificate with CPA Australia, Chartered Accountants ANZ or the IPA can apply for their own limited AFS license
under streamlining provisions. In all other circumstances you will need to first be licensed as a representative or
authorised representative." If I will hold the Limited Public Practice Certificate, can I apply for my own limited AFS
license?
Up until 30 June 2016, a member who holds a Public Practice Certificate with one of the three accounting bodies
will be deemed to meet the normal experience requirements under ASIC Regulatory Guide 105 Licensing:
Organisational Competence when they apply for a limited AFS licence. This includes the Limited Public Practice
Certificate.
Importantly, the member must still meet all other requirements including the completion of relevant education
and training.
I have academic qualifications and have completed the PP Residential Program. I will sit for the PP module exam
at the end of April. What should I do? Should I wait to get authorisation from CPA or should I apply for
authorisation now to any other organisation like AMP or other?
The first step is to determine the types of advice and services that you would like to apply for in your practice
once established. If this requires you to be licensed, then the next step is to determine what things are important
to you when considering which AFS licensee may suit your practice. CPA Australia has released Considerations
when selecting an Australian Financial Services (AFS) licensee to help members understand the key factors to
consider and potential questions to ask to ensure they select a licensee that fits the culture and needs of their
practice.
What resources exist to help members obtain the Limited AFS Licence?
CPA Australia has a range of exclusive resources for members to apply for the limited AFS licence, whether you
are a sole trader, partnership or operate in another structure. Email [email protected] with your name
and CPA Australia membership number.
What is the status of CPA Australia Advice?
CPA Australia Advice will be operational before 1 July this year. We have lodged our applications for the AFS
licence and ACL and expect them to be approved in the coming weeks. The next step will be the onboarding of
members, which we have already commenced planning.
If I complete a Diploma of Financial Planning am I allowed to give advice on SMSF's?
A wide range of advice can continue to be provided from 1 July 2016. This includes factual information, tax,
admin, compliance. Full guidance can be found in Financial advice and Regulations: Guidance for the accounting
profession which can be accessed at www.cpaaustralia.com.au/smsfadvice
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I am running a tax agent. Currently I have finished RG146 course. How can I apply the Limited AFS licence? Are
there any requirements for the application of the Limited licence? Or how can I apply for an authorized
representative?
There are a range of requirements to be eligible to apply for the limited AFS licence. If you hold a public practice
certificate with CPA Australia we can provide you access to a range of resources to help you apply for the limited
AFS licence by emailing [email protected] and providing your name and membership number.
To become an authorised representative, you need to talk to your prospective AFS licensee about their
requirements.
The CPA compliance solution offers 5 modules - if I only wish to deal in SMSfs do I have to complete all 5 modules,
or only modules 4 and 5?
The modules you will need to complete will depend on whether you are applying for the limited AFS licence or
will be licensed as an authorised representative.
If you are applying for the limited AFS licence and only wish to apply for the superannuation and SMSFs
authorisation, then at a minimum you will need to complete training in these areas.
If you would like to email [email protected] we can provide guidance for your specific circumstances.
What are we allowed to discuss with clients regarding the administration of their SMSF's?
Financial advice and Regulations: Guidance for the accounting profession provides comprehensive guidance on
what advice and services you can continue to provide if you are not licensed post 1 July. This includes
administration and compliance advice. You can access this at www.cpaaustralia.com.au/smsfadvice
In basic terms, if one was granted a CPA licence, therefore, one can set up a SMSF or provide advice relating to the
SMSF? And if you hold a limited AFS licence what is the position?
If you are granted a limited AFS licence with the superannuation and SMSFs authorisations you will be able to
recommend the set up and wind up of an SMSF, as well as pension and contribution advice for the SMSF. If you
wish to provide investment strategy advice or risk advice, with no specific product recommendations, in regards
to the SMSF then you need to apply for all authorisations available under the limited AFS licence.
If you are licensed as a Level 1 Basic Adviser with CPA Australia Advice, this will also permit the provision of this
advice.
Importantly under both circumstances, you must comply with the best interest’s duty and related obligations.
I submitted an expression of interest but have not received any further information.
CPA Australia Advice is currently in the process of contacting all members that have expressed interest in
becoming authorised. Members that were not able to attend the Information Sessions should
email [email protected] and request a copy of the recorded information session. This recording is
currently being edited and will be available shortly. Once the licences have been issued to CPA Australia Advice,
there will be an opportunity to commence the application process.
How is the accountants’ exemption reform in members’ best interests?
CPA Australia and other professional bodies worked hard to an appropriate balance between member interests
and the public interest. The accountants’ exemption provisions were always a temporary measure and the
introduction of a Limited AFSL provided an opportunity for members to provide additional advice under the
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framework which were not allowed under the exemption provisions. The accountants’ exemption was very
limited in scope while the Limited AFSL extends the scope of advice which an accountant can provide.
Why did CPA Australia not succeed in extending the accountants exemption?
The accountants' exemption was always problematic in that it restricted the scope the scope of advice you can
provide and not take into account the relevant circumstances of the client when providing the advice.
The new limited AFS licence will permit a much broader range of advice, allowing you to provide more valuable
advice to your clients.
As part of this reform, we were successful in implementing a three year transition.
Are the estimated costs for being an authorised representative of CPA Australia Advice available?
The costs to be authorised with CPA Australia Advice have not been broadly released to the public. Members that
have been able to attend the Information Sessions can request a copy of the recorded session as the costs of
licensing have been outlined in the information session. The release of the costs to all members will be made
available shortly and anyone that expressed their interest, will be contacted with this information. If you need
detailed information on the support services, please email [email protected]
CPA Australia Advice - for a fee. We pay over $1,400 a year to CPA Australia, but everything they offer costs us
even more. What exactly does the $1,400 cover?
Following a review of the public practice services and the need to continually expand the offer to assist members
to meet the changing business and regulatory environment, CPA Australia is extending its long term commitment
to public practitioners in 2016 and will be delivering a range of new initiatives including:
- New Succession planning tools and resources
- Revised public practice branding and advertising campaign
- New guidance on the impact of technology and digital disruption
- New guide and case studies on Outsourcing
- Increased focus on co-regulation and the development of new education pathways for public practitioners
- Market research on client perceptions and expectations to support practitioners to understand the needs of the
customer of the future
- Tailored communication
- Free webinars, podcasts and Live Chats on becoming a Firm of the Future
- New Professional Standards (limited liability) scheme
In addition, the increased costs associated with compliances and oversight programs for members holding a CPA
Australia Public Practice Certificate (including Quality Review program) will continue to be partially subsidised via
the PPC Fee.
The new initiatives are all aimed to benefit members and ensure that our every day public practice tools including
work papers, checklists & templates deliver services members have requested.
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What if you do not wish to provide advice, but a client asks you if you can order an SMSF for her. Can you order it
without a designation as a financial adviser?
You can provide execution only services if you are not licensed to provide advice. We strongly recommend that in
such cases you recommend the client firsts seeks advice or at least reviews available resources to ensure it is the
right option for them.
You will also need to keep documentation to show you have provided execution only services, that is no advice,
such as terms of engagement and client file notes. We have further guidance in Financial advice and Regulations:
Guidance for the accounting profession at www.cpaaustralia.com.au/smsfadvice
Will we be allowed to continue preparation of minimum annual pension calculations or obtain these calculations
from a superannuation specialist for SMSF's clients?
Please see previous response regarding the provision of factual and compliance advice and services.
What if I do not yet have a public practice certificate?
A member who does not yet have a PPC may apply to be authorized by CPA Australia Advice as employee of a
CPA Australia PPC holder. Unfortunately the transition provisions for a Limited AFSL are only available to a
member of CPA Australia, CA ANZ or IPA holding a PPC. Likewise the accountants’ exemption provisions only
apply to this same group.
I do not wish to offer financial advice, merely to continue to work in public practice with the ability to assist clients
with establishing, maintaining or winding up SMSFs.
i) what is the minimum requirement under RG 146 to achieve this, and
ii) which of the CPA course modules need be completed?
The study you will require will depend on how you will be licensed.
We can provide specific guidance on your options if you wish to email [email protected]
You can continue to provide factual advice, compliance and other services without being licensed.
But we can tell the client of the tax consequences of contributions?
Yes, you can provide advice regarding the taxation consequences in regards to contributions. However, you
cannot use this to then provide a recommendation. You must also provide the tax disclaimer in order to rely on
this exemption. A sample disclaimer can be found in Financial advice and Regulations: Guidance for the
accounting profession at www.cpaaustralia.com.au/smsfadvice
What are the PII requirements for CPA Australia Advice?
CPA Australia Advice covers PII requirements for any member being authorized. We also recommend members
consider the need for additional cover based on their individual circumstances. Fenton Green will be able to
provide further guidance on the appropriateness or need based for further cover on your individual
circumstances / risk profile.
I was thinking of using a third party license. They are charging $250 per month. Can we use a similar service from
the CPA Advice?
Members wishing to be licensed with an Australian Financial Services Licensee (AFS licensee) (as an Authorised
Representative) should check and compare their licensing needs with each AFS licensee they are considering.
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You should understand what an AFS licensee is offering as support services in exchange for the monthly
authorisation fee. Every AFS licensee generally offers different services and at differing levels - you should assess
what your needs are, what support you get from an AFS licensee and then compare the cost of joining a group.
Once the CPA Australia Advice costs are broadly released, you should be able to quickly compare this against
other AFS licensees. If you have not already registered your interest, you should do so and also request a copy of
the recording from the latest information session where support services and costs were explained and outlined.
Register your interest by visiting http://www.cpaaustraliaadvice.com.au/
If I haven’t completed RG146 can I still apply for a limited licence?
Unfortunately a member who wishes to apply for a Limited AFSL must have completed all the RG 146
requirements prior to lodging an application. However, in preparation a member may start preparing the
application in readiness. The DIY Licensing Kit provides excellence guidance to make the application process as
simply as possible.
As a CPA, will there be any issue of execution only service (i.e. pension documentation, LRBA set ups and new
SMSF setups) where I have disclaimed myself as execution only and recommended client to seek financial advice,
and have them sign off on this? Is there any issue?
You can provide execution only services, however we strongly recommend that you advice thee client to seek
licensed advice first.
Your terms of engagement and other documentation will need to show that you are providing execution only
services, noting that ASIC have an SMSF Taskforce that will focus on execution only services to ensure that you
are no providing advice.
You also need to take care to ensure that the client doesn't perceive that you are providing advice as well.
We recommend that you review Financial advice and Regulations: Guidance for the accounting profession to
clearly understand the advice and services you can provide without being licensed.
What assistance & advice can unlicensed CPA members give to trustees of SMSF re previously minor death benefit
member who is approaching age 25 and compulsory commutation of their account based pension regarding
calculation of the computation market value and seeking of computation documents from 3rd party
superannuation consultants?
Members can continue to provide factual, compliance, taxation and audit advice / services (subject to being
qualified) without being licensed. Financial advice and Regulations: Guidance for the accounting profession
provides guidance on the specific types of advice including examples regarding death benefits and pension advice.
I have done my RG146 training and now looking at being an authorised rep. I heard CPA was setting up a company
that we could become a rep for. Is this correct? Has CPA made details of how much it would cost to be a rep of
your company?
Congratulations on completing your training.
CPA Australia has announced the establishment of CPA Australia Advice Pty Ltd which is in the process of applying
for an Australian Financial Services (AFS) licence and an Australian Credit Licence (ACL) to operate as a financial
services business. This will provide members of CPA Australia with an independent alternative to become an
authorised representative and enter the financial services sector to provide advice.
Information that has been released is found by visiting www.cpaaustraliaadvice.com.au
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The licensing options and eligibility has been released and you should review this.
If you haven't registered your interest, you can do this on the website.
The licensing costs and support services have not been broadly released to members. For members that were
unable to attend the recent Information Sessions, you can also request a copy of the Information Session
recording by emailing [email protected]
1. Is the principal required to have the license if they wish for their firm to give advice about SMSF? And if the
principal has the license, would employees need their RG146 or limited AFSL to give advice? How about if the
principal only obtained their RG146?
2. There are courses which take 2 days whereas the CPA one takes weeks, what is the difference?
The individual applying for the limited AFS licence must complete the relevant training and hold a public practice
certificate with one of the three accounting bodies.
Any individual who provides financial product advice, noting an SMSF is a financial product, needs to have also
completed the RG 146 training and be appropriately licensed to provide the advice.
There are many different courses available. Importantly you need to ensure the courses that you complete will
give you the depth of knowledge and skills you need to ensure you provide compliant advice and meet all
regulatory requirements.
CPA Australia's RG 146 Compliance Solution can be completed via distance learning, where you complete the
modules as quick as you like, or two day face to face workshops where you then have 6 weeks to submit your
assignment.
Aren't CPAs going to be compromised by acting under licence from Financial planners post 1 July 2016?
Members who become licensed will be able to provide a broader range of advice than permitted by the
accountants' exemption.
If you apply for your own limited AFS licence then you will be independent in the advice you provide, or you can
consider being licensed with a company like CPA Australia Advice which will be independent from product
manufacturers and operate on a fee for service basis only.
I am a CPA but have never held a PPC. I am well on the way to completing my RG 146 training and have enrolled in
the PPC practice management subject and the intensive. The results for the practice management exam are
released on 17 June. I am concerned about meeting the 30 June ASIC licence application deadline. Will CPA
Australia be in a position to accept my application for a PPC before the exam results are released and "preapprove " my PPC application subject to the exam result, so that I can submit a letter from CPA Australia to ASIC in
support of my license application before 17 June?
As previously indicated, whilst CPA Australia cannot approve a PPC until the exam results are issued we are
commitment to support members via a pre-assessment of their PPC application. I recommend that you complete
the application form asap and ensure you have the required supporting documentation (See PPC Application
checklist). This will allow CPA Australia to confirm approval of a PPC within 24 hours of the results being issued.
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If we go down the path of obtaining a limited license and have completed DFP and a short course in SMSF as
recommended, can we then carry out a risk profile for a client and recommend a certain level of life
insurance/TPD/income protection? And also recommend whether the insurance should held by the SMSF or
personally?
A member can obtain a limited AFS licence with the life and general insurance (class of product) authorisations if
the accountant wishes to:
- advise a client in relation to the particular types of life risk insurance they should hold (e.g. life insurance)
- advise a client on how much insurance they should hold; or - advise a client of the insurance risks associated
with changing superannuation funds.
Only holders of a full AFSL (with the appropriate authorisations) will be able to:
- provide advice in relation to individual insurance products; and
- provide assistance with completing application forms for insurance policies.
I am a sole trader without any employee. I would like to set up a new company to apply the limited licence. How
would I provide financial statements to ASIC then? Can I provide the financial statements of my practice as a
guarantor?
CPA Australia has resources for members interested in the Limited AFS Licence. Please review these
at www.cpaaustralia.com.au/smsfadvice
Members that hold a CPA Public Practice Certificate can request our exclusive resources that include a DIY
Licensing Kit for members wishing to apply for their own Limited AFS licence - please
email [email protected] with your name and membership number.
Whilst we cannot provide legal advice on the financial statement requirements, it is also recommended that you
visit the Limited AFS license resources on the ASIC website, in particular you should review the Regulatory Guides
(RG). Main regulatory guides to review are RG104, RG105, RG146 and RG166.
Some links below to help you find ASIC's position on financial statements when applying for a Limited AFS licence
http://asic.gov.au/for-finance-professionals/afs-licensees/applying-for-and-managing-an-afs-licence/limited-afslicence-accountants-and-advice/
http://asic.gov.au/regulatory-resources/regulatory-index/financial-services/
Can I submit my limited licence application whilst completing the RG146 requirements?
Unfortunately ASIC will not accept an application for a Limited AFSL until all the RG 146 requirements have been
completed. Any member applying for a Limited AFSL after 30 June will be able to rely on the transitional
arrangements and make need to seek an alternative authorization pathway.
What course of action should you take if you intend to apply for the Limited Licence but have not completed all the
RG146 Modules by June 30 2016? Would you go ahead and apply for a licence before June 30 and complete the
remaining modules after June 30 2016? Despite starting in May 2015 I have been unable to complete one module
because there has been a 3 week wait to have assignments marked and a one week wait to have enrolment
processed adding up to a one month wait in between modules which can't be done concurrently. Have ASIC
advised a date when you need to apply by? If you need to be "licensed" by 30 June 2016 does that mean your
application has to be processed or only lodged by this date? What happens with the applications in transit i.e. that
are lodged before 30 June 2016 but not approved until after June 30 2016?
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If you lodge your application by 30 June but it is not approved by 1 July 2016 you cannot provide any advice until
such time that ASIC approve your application.
That is, ASIC will continue to review and approve applications received before 30 June 2016, however you must
ensure that all requirements have been met prior to application.
Will limited AFSL holders be able to give authorisation to representatives who have completed their RG146 to give
advice? Or does each individual who wishes to give advice have to obtain the licence?
If as the principal you apply for the limited AFS licence, as the responsible manager you can authorise individuals
to also provide advice under your licence.
As the responsible manager, you must ensure that any individual has first completed RG 146 training relevant to
the areas of advice that they will be licensed to provide.
With regards to the small practice operation from home can a CPA member refer their client to CPA Australia in
order to obtain professional advice with regards to SMSF and then setup the SMSF?
If you are not licensed to provide advice, you can refer your client to an appropriately licensed CPA Australia
member for such advice.
For example CPA Australia Advice, once operational, will have a network that unlicensed members can refer
clients to for such advice from licensed members with CPA Australia Advice.
Can I have my application checked before submitting it with ASIC?
If you have the DIY Licensing Kit there is a checklist included to assist you to undertake a self-assessment for
completeness. Member who have used this tool have provided have a very positive experience. If you hold a PPC
with CPA Australia email [email protected] with you name and membership number and we will send a
copy to you.
I did a PS 146 compliant course through CPA Australia in 2002. There was no insurance module in that course. If I
need to get a limited licence then do I need to get full retraining RG146 or can I get training for insurance or can I
ignore?
The RG 16 training you will need for the limited AFS licence will depend on the authorisations you are seeking.
If you would like to email [email protected] we can assist you with your training needs.
CONTACT
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Copyright © CPA Australia Ltd (“CPA Australia”) (ABN 64 008 392 452) 2016.
DISCLAIMER: CPA Australia Ltd has used reasonable care and skill in compiling the content of this material. However, CPA Australia Ltd
makes no warranty as to the accuracy or completeness of any information in these materials. The above material is only general in nature
and not intended to be specific to the reader’s circumstances. Further, as laws change frequently, all practitioners, readers, viewers and
users are advised to undertake their own research or to seek professional advice before making any decisions or relying on the information
provided.
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