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Licensing requirements for accountants who provide SMSF services updated by ASIC

After almost two years of accountants exemptions were repealed, there is still confusion among accountants folk regarding requirement of an AFS licence and it is still not clear to many accountants on what activities they can and cannot do with or without a licence.

 

ASIC recently amended their information sheet 216 to help accountants understand their activities and perhaps help them to draw a line - on when an accountant will require an AFSL and give a clear understanding of exempt activities.

Exemption which allowed accountants to give financial product advice about acquiring (set up) or disposing (close down) of an interest in an SMSF was repealed on 1st July 2016, this exemption was in regulation 7.1.29A of the Corporations Regulations 2001 (Corporations Regulations).

A range of other exemptions still continue after 1st July 2016. Under these exemptions, you can provide some types of financial services without being covered by an AFS licence.

From 1 July 2016 all accountants must be covered by an AFS licence to give advice about acquiring or disposing of an interest in an SMSF to their clients. A person who provides financial services must be covered by an AFS licence, either by:

  • holding an AFS licence, or
  • becoming the representative of an AFS licensee and providing financial services on behalf of the AFS licensee

Accountants can apply for an AFS licence to provide a limited range of financial services relevant to SMSFs. ASIC refers to this form of licence as a ‘limited’ AFS licence: see ASIC regulations 7.8.12A and 7.8.14B.

 

 


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What is a Financial Product

Financial products include an interest in an SMSF and many of the investments that are typically held by an SMSF, such as securities and interests in managed investment schemes.

While real property is not itself a financial product, an interest in an SMSF is a financial product. Providing a recommendation or a statement of opinion on using an SMSF as a vehicle to invest in real property is financial product advice, and requires an AFS licence with an appropriate authorisation.

If you are discussing options for borrowing for investment in residential property through an SMSF with your clients, you might need to be covered by an Australian credit licence.

A limited AFS licence only authorises the licensee to provide a limited range of financial services relevant to SMSFs – for example, advice about SMSFs, advice about a client’s existing superannuation holdings (in certain circumstances) and ‘class of product advice’ – depending on the authorisations that are selected in the application and granted by ASIC.

‘Class of product advice’ means financial product advice about a class of products that does not include a recommendation about a specific product.

For example, an accountant covered by a limited AFS licence could provide class of product advice about mining shares or shares in the ASX 100, as long as that advice did not include a recommendation about a particular mining share or a particular share in the ASX 100.

 

 


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CPD Requirement for SMSF Auditors

 

SMSF Auditors: SIS Regulations 9A.04

(1)  For paragraph 128F(a) of the Act, the requirements in this regulation form the continuing professional development requirement.

             (2)  The approved SMSF auditor must undertake at least 120 hours of continuing professional development every 3 years.

             (3)  The development must:

                     (a)  include 30 hours of development about superannuation at least 8 hours of which is development about auditing of self managed  superannuation funds; and

                     (b) : be development that could reasonably be expected to enhance an approved SMSF auditor's technical skills or professional service delivery.

 


 

This is what one of the attendees had to say about our seminar : 

Thank you Manoj for inviting me to your seminar. I really learnt a lot of practical SMSF audit issues from the seminar . I liked your presentation style and the way you conducted the technical  content explaining the new law on how it will work on the white board. I been to many seminars including SMSF School and SMSF workshops run by professional bodies but your presentation was quite unique and much much better - it was targeted at my level and I could understand how simple strategies can help my clients - we need simplified versions of complexities of the new SMSF law including CGT relief, effect of balance transfer account on death benefits, ECPI etc . You’re one of the best! Please include me in your mail out for your technical sessions.

Ash Alam CPA

Registered Tax & ASIC Agent 

Justice of the Peace & SMSF Auditor

 


 

Current Exemptions to Accountants

There are a number of exemptions from the requirement to be covered by an AFS licence, including for accountants providing services relating to SMSFs. These exemptions apply to a variety of different activities

SMSF services provided by accountants usually fall into one of three categories:

  • traditional’ accountant services – for example, preparation and lodgement of tax returns, which are not regulated as financial services
  • financial product advice relating to SMSFs – this is a financial service that requires the provider to be covered by an AFS licence
  • exempt SMSF financial services – an AFS licence is not required to provide these services, as they are either not a financial service or they are covered by a licensing exemption. However, in some cases, you might still be required to meet other requirements, such as providing your clients with warnings.

 

Exemptions will apply if the financial service happens to be an integral part of or incidental to another type of service typically provided by an accountant – that is, you would reasonably need to provide the exempt SMSF financial service in order to carry out your normal accounting practice.

There are other types of advice and services you may provide without an AFS licence, such as

 

 

Type of SMSF service

 

 

What you may do without being covered by an AFS licence

 

 

Relevant legislation

Establishing, operating, structuring or valuing an SMSF, including advice and assistance on administrative and operational issues, and the process of winding up or exiting an SMSF

You may provide advice on establishing, operating, structuring or valuing an SMSF, as long as you give your client the appropriate warnings. This includes:

  • advice provided for the sole purpose of, and only to the extent reasonably necessary for, ensuring compliance with the superannuation legislation
  • advice on the process of winding up or exiting an SMSF.

You may not recommend that your client acquires or disposes of an interest in an SMSF.

 

Regulation

7.1.29(5)

Asset allocation and investment strategy

You may provide a recommendation or statement of opinion on how your client should distribute their available funds among different categories of investments.

 

You may not advise your client to make particular investments through the SMSF

 

Regulation

7.1.33A

Tax advice on SMSFs and other financial products

You may provide tax advice on financial products, such as an interest in an SMSF and underlying investments held by the SMSF, as long as you do not receive a benefit as a result of your client acquiring a financial product (or a financial product that falls within the class of products) mentioned in the advice and you give your client the appropriate warnings.

 

Regulation

7.1.29(4)

Tax agent and BAS services

If you are a registered tax agent or BAS agent, you may provide advice that is given in the ordinary course of the activities of such an agent and that is reasonably regarded as a necessary part of those activities.

 

Section

766B(5)(c)

Referring clients to an AFS licensee or representative

You may refer clients on to an AFS licensee or representative for financial product advice, as long as you make the appropriate disclosures

 

Regulations

7.6.01(1)

(e)–(ea)

 

Establishing, operating, structuring or valuing an SMSF

- without AFS Licence

You may provide advice on establishing, operating, structuring or valuing an SMSF without an AFS licence: regulation 7.1.29(5). This means that without being covered by a licence, you can:

  • provide advice on:
    • the practical steps that need to be taken to establish or wind up an SMSF
    • how to add new trustees and members to an existing SMSF
    • the different ways an SMSF could be structured
    • how to process transfers or rollovers of funds
  • assist clients to complete paperwork (e.g. to acquire securities through the SMSF, as long as you do not influence the decision to acquire those securities)
  • help clients to add new members and trustees to a fund or to exit a fund
  • arrange to wind up an SMSF on a client’s behalf.

You may also provide other relevant factual information that your client should know about establishing an SMSF (e.g. that they must have the financial accounts and statements for the SMSF audited each year by an approved SMSF auditor).

You can only rely on this exemption if the advice is provided to a trustee, a director of a trustee, an employer sponsor or a person who controls the management of the SMSF. The advice must be given to the person in their capacity as a person who controls the assets owned by the trustee of the SMSF, and not in their capacity as a beneficiary (member) of the SMSF.

Where you are relying on this exemption, if your client is a ‘retail’ client (as opposed to a ‘wholesale’ client – see section 761G and related regulations for the definition of this term), under regulation 7.1.29(5)(d) you must provide a written statement to your client that:

  • you are not licensed to provide financial product advice under the Corporations Act
  • they should consider taking advice from an AFS licensee before making a decision about a product.

The advice you give about establishing, operating, structuring or valuing an SMSF must not amount to an explicit or implied recommendation to establish an SMSF, or to acquire or dispose of an interest in an SMSF (or another superannuation product). However, ASIC recognises that advice given to a person about the establishment of an SMSF may also carry an implicit recommendation that the person acquire an interest in the SMSF.

Therefore, you are more likely to be able to rely on the exemption when your client has already made a decision to establish the SMSF before seeking your assistance to take the next steps. For example, you may recommend the best structure for an SMSF to suit your client’s situation, after they have made the decision to establish an SMSF.

 

Establishing, operating, structuring or valuing an SMSF

- with AFS Licence

If you are covered by an AFS licence, including a limited AFS licence, you cannot rely on the exemption for the provision of advice on the establishment, operation, structure or valuation of a superannuation fund (regulation 7.1.29(5)) to a retail client. This is because an AFS licensee, or its representatives, cannot comply with the requirement in regulation 7.1.29(5) (d)(i) to provide a written statement that the person providing the advice is not licensed to provide financial product advice under the Corporations Act.

Therefore, any financial product advice that you provide to a trustee of a superannuation fund about the establishment, operation, structure or valuation of the fund is not an exempt service and will generally be covered by your licence. This includes advice given for the sole purpose of complying with superannuation legislation.

 

 

 


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Learn how to Audit in less than half time 

CPD Hours : 6 Hrs in SMSF & Audit - 2 Hrs in Superannuation & 4 Hours in Auditing SMSF's

Topics

  • Do more with less time using an Online Audit Program
  • Audit of Funds with Pension members above Transfer Balance Cap Amount
  • SMSF audit under the new regime of Contributions / Total Superannuation Balance
  • CGT Relief - What is it and who can claim and how to audit funds who have claimed them

 

Seminar : Let us show you... How to reduce SMSF Audit time in half! - 6 CPD hours in SMSF Audit

Venue : Suite 3.04, Level 3, 29-31 Solent Circuit Baulkham Hills NSW 2153  

Date : 24th May 2018 - 14th June 2018

Venue: Melbourne Stamford Plaza Hotel - City     Date: 16th August 2018 - 7 Seats Left

Venue: Brisbane Stamford Plaza - City     Date: 30th August 2018 - 8 Seats Left

 

Timings : 09:30 am to 03:30 pm

 

Cost: The fee for seminar is $165 Incl. GST and is tax deductible(Plus Travel). Includes 10 audits worth $187 Incl. GST

 

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How to reduce SMSF Audit time in half!

Do more with less ...

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OVER 74,000 funds audited using the system.

Green Chit given by Professional body reviewers - Meet and Exceed your Professional requirements.

 

Proposed Agenda

09.00 AM  Registration - Arrival Tea and Coffee

09.30 AM  Introduction to Audit Online on SMSF Audit Software and Website integration

11.00 AM  Tea/Coffee Break

11:30 AM Audit of SMSF under the new regine of Transfer Balance Cap | Contributions & Total Superannuation Balance | CGT Relief 

01:00 PM Lunch and Group Discussion on Audit of funds with LRBA - Loan from related party - how repayment of Loan will be considered  

02.00 PM  How to complete an audit in half the time

4.00 PM  Workshop Closed

 

Introduction/Overview

SMSF Auditors spend too much time in financial audit and completing manual audit working papers, our online software does most of this work automatically & saves half your time as compared to traditional auditing methods.

It checks closing share prices, dividends received from ASX and all mundane tasks of signing, scanning & mailing of audit report, Mgt. letter, engagement letter, Invoice & contravention reports etc. are automated with one click of a mouse. Embrace an efficient framework for high quality audits and conduct audits on a flawless workflow Management system.

Achieve peace of mind & confidence of knowing that you are using a completely up-to-date online checklist and cloud process to deliver a robust, hassle free top quality SMSF audit. Improve communication with accountants & trustees. Manage 20 or 2000 audits by streamlining workflow from our smart Audit Manager & establish seamless communication between all parties. Our online SMSF audit system is the only tool which can deliver reliability, speed and volume and ultimately profits for your business at a fraction of the cost.

 

Benefits/learning outcomes

Audit from anywhere, anytime from any device on your own website or by integrating with ours. Increase audit effectiveness, add value, reduce audit risk, drive SMSF compliance, revolutionise your business.

Included in the fee is an account to audit 10 SMSF on the online platform worth $187 and Lunch. Those auditors who are already using the online software will benefit by learning new shortcuts and other advanced features of the online software. 

 

Recommended For

All SMSF ASIC approved auditors.

Session Notes

CPD Hours

2 Hours CPD in Superannuaiton and 4 Hours CPD on auditing SMSF's Total 6 CPD hours under self assessment method under RG 243.88 - 90 and SISA 128Q and SISR 9.04

RG 243.89 You will need to complete 120 hours of CPD over each three-year period, which must include 30 hours of development on superannuation and at least 8 hours of development on auditing SMSFs.

SISR 9A.04 (3) (b)  be development that could reasonably be expected to enhance an approved SMSF auditor's technical skills or professional service delivery.

 

Attendee Requirements

Attendees may bring their own Laptops / Ipads for a better understanding - although some attendees may get more from the workshop by looking at the facilitators screen 

Speaker

Manoj Abichandani 

Manoj has worked in SMSF since 1988 and is SMSF Specialist (UNSW). He was providing high level advisory services to over 600 funds in his own 3 partner CPA tax practice for 19 years and has written this online software. He currently works as SMSF Technical Support Team Leader at www.trustdeed.com.au

He has hands on knowledge on what happens in a tax practice on high level of SMSF practical issues. 

 
 
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