Upcoming Renewal of Tax (Financial) Adviser Registrations

             Do you know when you’re due to renew your TPB registration?

             Do you meet the education and relevant experience requirements for registration?

             Are you recording your tax CPD?

             Are your personal tax affairs in order?

             Are your contact details with the TPB and ASIC up to date?

These are some of the questions that the Tax Practitioners Board (TPB) wants financial advisers who are Registered Tax (Financial) Advisers (TFAs) to ask themselves if they are going to be ready to renew their registration.

An individual’s renewal date is determined by when they notified the Tax Practitioners Board. If an individual is unsure when their registration is due for renewal, refer to the table below or search the Public Register of tax practitioners (www.tpb.gov.au).

The TPB says that there are about 18,000 TFAs who registered under the Notification Option over the last two years.  Depending on when a TFA registered under the Notification Option, their current registration with the TPB will expire as follows:

    Notification Option

     Date you registered (i.e. notified)    Date your registration expires

  •   1 July to 31 December 2014                31 January 2018
  •   1 January to 30 June 2015                  31 October 2017
  •   1 July to 31 December 2015                31 July 2017

This means that many financial advisers now have less than 12 months until they have to renew their registration and will need to meet the relevant registration requirements to continue to be registered to provide tax (financial) advice (for a fee or reward).  

This is important to note because providing tax (financial) advice is integral to providing personal financial advice and you will need to meet the relevant registration requirements (see below) to have your TFA registration renewed.

If you are not registered and provide tax (financial) advice services, you also put at risk being legally permitted to continue practising as a financial adviser.

Note: If you have not previously gained registration through the notification process, you may apply to register under the transitional option. This option is available from 1 January 2016 to 30 June 2017 – to Australian financial services (AFS) licensees and representatives to apply for registration as a TFA – and requires an applicant (individuals, companies and partnerships) to satisfy the TPB that, among other things, they have ‘sufficient experience’ to be able to provide tax (financial) advice services to a competent standard. However, if you registered under the notification option, you cannot renew under the transitional option.

The following are key things to know about Registering under the Standard Option.

 

Registering under the Standard Option

Under the standard registration option, you need to meet all of the standard registration requirements.

Individuals must meet requirements in relation to:

Companies and partnerships must meet requirements in relation to, among other things:

  • professional indemnity insurance (that meets the TPB’s requirements);
  • having a ‘sufficient number’ of individuals registered as TFAs or tax agents (to provide tax (financial) advice services to a competent standard, and to carry out supervisory arrangements).

 

Education and relevant experience

You should consider the qualifications and experience you currently have to determine which registration pathway option is right for you. A useful summary table overview of the qualifications and experience requirements for all the registration pathways (for individuals) is available on the TPB website and a relevant extract is provided below:

Table diagram showing qualifications and experience required for tax (financial) advisers

Unless a TFA meets the requirements as a voting member of a TPB-recognised professional association (under the 'Item 304 registration pathway'), they will need to have completed TPB-approved courses in Australian taxation law (including a component in the Tax Agent Services Act 2009 (TASA) and the Code of Professional Conduct) and commercial law (in addition to satisfying other requirements as outlined in the extract above). 

To be eligible under the Item 304 registration pathway, a TFA needs to:

  • be a voting member of a recognised tax (financial) adviser association (current recognised associations include the AFA, FPA, SMSF Association and IPA; for AFA members this means being a financially paid up Practitioner Member or Affiliate Member) or recognised tax agent association, and
  • have the equivalent of at least 6 years’ full time relevant experience in the last 8 years.

 

              Relevant experience

There is no single definitive list of what constitutes relevant experienceThe TPB says that:

    Under the standard option, relevant experience can include work:

  • as a registered tax agent or tax (financial) adviser, or
  • under the supervision and control of a registered tax agent or tax (financial) adviser, or
  • of another kind approved by the TPB (see further below)

     that included substantial involvement in one or more of the types of tax (financial) advice services described in section 90-15 of the Tax Agent Services Act 2009, or

     substantial involvement in a particular area of taxation law to which one or more of those types of tax (financial) advice services relate.

So what is and is not relevant experience can be quite broad.  For many financial advisers, it will be a simple matter of showing that they have been competently providing the equivalent of 6 years of full-time relevant experience in tax (financial) advice services in the last 8 years, or otherwise they will need to complete the two TPB-approved courses (see links further above).

 

    What is a tax (financial) advice service?

Simply put, for most financial advisers who provide personal financial advice, a tax (financial) advice service can be summarised as:

    explaining to a client the taxation consequences of your financial advice to them

The actual definition is a lot more complex than this, with five elements. To understand the full definition and some examples of tax (financial) advice, see the TPB's explanation

 

    Full time equivalent

It is important to not overlook the need for tax (financial) advice experience to be six-years’ full time equivalent experience over the last eight years.

The TPB understands that some people have taken time off from full time work and that others may have been employed under part-time arrangements for some of the last eight years.  As outlined above, the TPB may consider situations that don’t neatly 'fit into the box' and for this reason will consider cases on their respective individual merits, having due regard to the particular facts and circumstances as appropriate. 

For more information about relevant experience, see the TPB’s Information Sheet 24/2015.

 

    Paraplanners

For those who have not been a fully RG-146 qualified financial adviser for 6 years or more, the key words from the third dot point under Relevant Experience above are:

  • “substantial involvement”, and
  • “under the supervision and control of a registered tax (financial) adviser”. 

The TPB says that paraplanning work may constitute relevant experience where the paraplanner is involved in the provision of a tax (financial) advice service.  The TPB gives the example that it “could include regular and frequent involvement in the taxation aspects relating to statements of advice” - see paragraph 21 of the TPB’s Information Sheet 24/2015

Relevant information about the paraplanning work should be included in the TPB's Statement of Relevant Experience form, recognising that applications will be considered on a case-by-case basis by completing the TPB's Statement of Relevant Experience form

Ultimately, whether an individual satisfies the relevant experience requirement is a question of fact to be determined by the TPB on a case-by-case basis having regard to the individual’s circumstances and the extent to which they are involved in the provision of a tax (financial) advice service.

 

    How do I find out whether I meet the qualifications and relevant experience requirements?

The TPB has recently launched an Online Decision Tool on their website to help Registered Tax (Financial) Advisers check whether they satisfy the qualifications and experience requirements and identify suitable registration pathways. 

For more information about relevant experience, see the TPB’s Information Sheet 24/2015.

If a TFA doesn’t meet the 6-in-8 years’ relevant experience requirement for professional association members, there are three other options to meet the registration renewal requirements – but each of these will require completion of the two TPB-approved tax courses before the TFA's registration expires.

 

What else do I need?

When TFAs renew their registration, they may have to provide copies of their qualifications.  Even long-term RG146 qualified advisers will need to provide the TPB with evidence of their experience.  This is best done through completing the Statement of Relevant Experience form.

As well as this, a TFA will need to:

  1. be a ‘fit and proper’ person – you will need to complete a declaration confirming they:

          o   are of good fame, integrity and character,

          o   in the last 5 years, none of the following events have occurred:

                 - convicted of a serious taxation offence,

                 - convicted of an offence involving fraud or dishonesty,

                 - penalised for being a promoter of a tax exploitation scheme,

                 - penalised for implementing a scheme that has been promoted on the basis of conformity with a product ruling in a way that is materially different from that described in the product ruling,

                 - had the status of an undischarged bankrupt, and

                 - been sentenced to a term of imprisonment, or served a term of imprisonment in whole or in part.

If there are matters or events that may affect your good fame, integrity and character (including, for example, outstanding personal tax obligations with the ATO or being subject to any disciplinary action by a relevant professional body), you will need to include relevant information about this. This includes explaining why the matter or event should not adversely affect your eligibility to be registered with the TPB.

      2. have been an AFS licensee or a representative of an AFS licensee within the 90 days preceding their renewal application,

      3. meet the TPB’s continuing professional education (CPE) requirements - as it is called in the TASA.  The TPB will accept compliance with the AFA’s CPD requirements as meeting the TPB’s CPE requirements provided that CPD (or CPE as it's called in the Act) was:

  • relevant to the tax (financial) advice services you provide,
  • the activities completed are provided by persons or organisations with suitable qualifications and/or practical experience in the subject area, and
  • total at least 60 hours in the last 3 years (including not less than 7 hours of relevant CPE in any given year of a registered TFA’s CPE period, noting that a TFA’s CPE period begins on the date the TFA is registered and ends on the date their registration expires in respect of that registration).  

         Remember, if you attend a 1 hour CPD session which includes a tax component to the content, you can record that against your AFA CPD record as well as your TPB CPD record.

For further information about the TPB’s CPE requirements, see its Explanatory Paper 6/2014: CPE requirements for TFAs.

      4. are covered under a professional indemnity insurance (PII) policy that meets the TPB’s requirements (including indemnifying tax (financial) advice services for up to $2 million, unless your expected revenue from those services is higher)

For detailed information about the TPB’s PII requirements see its Explanatory Paper 5/2014: PII requirements for TFAs.

Note: In determining the TPB’s PI insurance requirements, the TPB gave detailed consideration to the compensation requirements imposed on Australian Financial Services (AFS) licensees by the Australian Securities and Investments Commission (ASIC). In doing so, the TPB, wherever possible, adopted a significant number of ASIC requirements to avoid duplication. However, there are two key differences between the TPB and ASIC’s requirements:

  • The TPB requires PII coverage to include tax advice (ASIC’s requirements do not extend to tax advice);
  • The PII requirements under the TASA apply to all entities that are registered with the TPB, not just to AFS licensees.
  • You will need to have the following details on hand:

            ·     policy number

            ·     name of insurer

            ·     start and end date of the policy, and

            ·     amount of cover.

          If you are covered by the PII policy of another registered tax practitioner (such as your AFS Licensee or employer), you will need the following details on hand:

            ·     name of the registered tax practitioner who you are covered by (such as your AFS Licensee or employer), and

            ·     registration number of that registered tax practitioner, and

      5. complete the online application form

 

Are there any costs?

When you submit your renewal application, you will need to pay an application fee of:

  • $400 if you are carrying in a business,  or
  • $200 if you are not carrying on a business.

You 'carry on a business' as a tax (financial) adviser if you provide tax (financial) advice services for a fee or other reward. A fee includes an amount, part or all of which is payable via a third party. For example, an authorised representative receives an amount that has been passed on by their Australian financial services licensee and/or corporate authorised representative.

You do 'not carry on a business' as  tax (financial) adviser if you provide services on behalf of another registered tax practitioner (such as your employer) and do not charge or receive a fee or other reward.

 

What if I’m a registered tax agent or BAS agent?

If you are registered as a tax agent or BAS agent, you will need to comply with the registration renewal requirements for a Registered Tax Agent or BAS Agent respectively.

If you are a fully registered tax agent or a registered tax agent with a condition of financial planning, your registration already covers the provision of tax (financial) advice services and there is no requirement to register as a TFA. However, you may still register as a TFA if you wish.

 

What happens if I leave it too late?

You must be registered with the TPB if you provide a tax (financial) advice service for a fee or other reward.

If you fail to renew your registration on time you will no longer be able to legally provide tax (financial) advice services for a fee or other reward. 

As the Best Interests Duty requires advisers who provide personal financial advice to ensure that clients understand all of the relevant consequences – including taxation consequences – of their recommendations, this means you risk being sanctioned by the TPB if you provide personal advice after the deadline to renew without validly renewing.

 

Next steps

Registered tax (financial) advisers must apply to renew their tax (financial) adviser registration at least 30 days before it expires to continue providing tax (financial) advice services (see dates further above).  The TPB has said that TFAs who lodge renewal applications on time will remain registered until the TPB notifies them of the outcome of their renewal application.

However, it is important to recognise that the TPB will only send TFAs an invitation to renew their registration 60 days before the current registration expires (using the latest contact details you have provided to the TPB). As such, it is important to not leave things too late, especially if there is a need to complete the two TPB-approved courses.  TFAs should actively identify suitable registration renewal pathways and associated requirements as early as possible.

Note: It is likely to take at least 6 months to enrol in, complete and receive the course completion certificates for both courses.  

The following key messages are also highlighted :

  • The AFA strongly suggests that members start the process now to decide whether they will be able to satisfy the 6-in-8 years’ relevant experience requirements and if they don't, identify if there are other suitable registration pathways.
  • Registration cannot automatically be granted (as distinct to the largely automated notification period) as each application must be assessed in relation to required qualifications and/or experience as appropriate before a decision can be made. As such, processing times for future applications may be impacted by the current resourcing constraints and the large influx of standard registration renewal applications expected in due course (from July 2017, depending on when entities notified).
  • If the TPB approves your application for renewal of registration, your registration will last for at least three years from the date your registration would have expired (not disadvantaged if renew early)

Further, if your registration renewal application is approved, you will have access to the TPB Registered Tax Practitioner Symbol (more information about the Symbol is available from the TPB’s website at www.tpb.gov.au)

 

    Where do I start?

We recommend that AFA members start with the TPB’s Online Decision Tool.  Also start compiling evidence of relevant experience (including completing the Statement of Relevant Experience form).  

If an AFA member thinks that it’s likely they will need to complete the relevant TPB-approved courses, start the process now to ensure everything is in order by the time registration is due for renewal. 

When a TFA is ready to start the renewal process, they can do so through the online application form.

Also remember to make sure your contact details are up-to-date.

It is also understood that the TPB will be releasing a TFA renewal kit in due course as a practical tool to assist entities renewing, or to those who assist those entities renew, their registration.

If need be, you can contact the TPB on 1300 362 829 or email them at tfa@tpb.gov.au

The AFA will also keep you informed of relevant developments, including relevant key messages and outcomes from the TPB Financial Adviser Forum (of which the AFA is a representative).

 

    Interaction with the upcoming Professional Standards Framework

Once the Professional Standards Body is established (the draft legislation has yet to be introduced to Parliament), the AFA will be advocating for the two systems to be aligned so that courses completed by advisers to meet TPB requirements can be recognised as counting toward the equivalency requirements of the future Professional Standards requirements.

 

    After renewing your registration, get ready for your Annual Declaration

If the TPB approves your application for renewal of registration, your registration will last for at least three years from the date your registration would have expired (not disadvantaged if renew early). 

Further, TFAs (who register or renew under the standard registration option) will need to complete a simple Annual Declaration on the anniversary of their registration renewal date (other than in the year that you need to renew registration) to demonstrate that they meet their obligations and the ongoing registration requirements as a registered tax practitioner, including:

  • having professional indemnity insurance cover
  • undertaking continuing professional education (CPE) - individuals only
  • satisfying fit and proper requirements, and
  • meeting their tax obligations.

As part of this process, you will be sent an email to let you know when your annual declaration is due (you will have 45 days to complete the declaration) and how you can complete your annual declaration.

 The annual declaration process is expected to commence in 2017 and more information about Annual Declarations will be released by the TPB in due course (before implementation commences), including updates to the Financial Adviser Forum.

As noted above, you can find out your renewal date on the TPB Register.  It is also important that you keep your contact details up to date.

 

How can the AFA help?

The AFA is one of only four TPB - Recognised Tax Financial Adviser Associations.  We are here to help AFA members understand what their obligations are. 

If you have any questions, contact our membership team at info@afa.asn.au