More than an exemption

The last couple of months have seen many Chartered Accountants become increasingly engaged with the Institute as word spreads about the removal of the accountants’ exemption. It is an issue that certainly has many members “hot under the collar”. However I was surprised by the number of Chartered Accountants who weren’t fully aware of exactly what the accountants’ exemption is and the limitations it has in its application. (Yes, it still “is” – the removal is not due to take effect until 1 July, 2012.)

The accountants’ exemption refers to the ability for recognised accountants to recommend the setup or closure of a Self-Managed Superannuation Fund (SMSF) without the need to operate under an Australian Financial Services License (AFSL).

Interestingly, the only reason we need the accountants’ exemption is because SMSFs are considered or viewed as a financial product, which would otherwise require an adviser to operate under an AFSL.

My view is if SMSFs were more appropriately classified as a structure, not a product, the accountants’ exemption wouldn’t be required at all – it is the underlying investments that are financial products, not the SMSF itself.

The other difficulty with the legislation is that it doesn’t talk about an accountant advising a client NOT to set up an SMSF; nor does it allow accountants to explore alternatives for superannuation savings. In terms of structural, tax and asset protection advice, accountants need to be able to talk about SMSF as a viable alternative to other structures, such as companies and trusts, to potentially hold and grow assets.

Clearly, accountants need to talk about SMSFs with their clients but they also need to talk about a whole lot more! Accountants, as trusted professionals, are well placed to provide simple, affordable, non-product financial advice and have a significant role in ensuring Australians are able to gain access to advice when they need it.

This issue has had quite a bit of attention in the public domain – you may have seen an article I wrote in the recently released Spring 2010 edition of SMSF Magazine, entitled ‘Exempt No More’.

What kind of advice do you think accountants should be allowed to provide their clients? I would love to find out more about what our members think about this issue – please feel free to share your thoughts.