Boutique AFSL Compliance Services - Integrity Compliance

AFSL Compliance for Boutique Licensees

Changes to the Tax (Financial) Adviser Requirements

As part of the Financial Sector Reform (Hayne Royal Commission Response - Better Advice) Act 2021

Changes to the Tax (Financial) Adviser requirements

We flagged last year that in 2022 tax (financial) advisers would no longer need to be members of the Tax Practitioners Board (TPB). There is now a new registration process for advisers which we will discuss further below. There is also more information in ASIC Info Sheet 268 about the specifics.

Please click here to access the Info Sheet.

Some of the changes from 1 January 2022, include:

Are you a relevant provider?

    • If you were a ‘relevant provider’ on 31 December 2021 and were individually registered with the TPB and had met the relevant training requirements, then generally you can keep providing tax (financial) advice services.
    • Advisers who were relevant providers of tax (financial) services in 2021 will now be referred to as ‘deemed providers’ and will not need to hold TPB membership. Financial advisers will now be regulated by the Corporations Act and ASIC as part of the newly created Financial Services and Credit Panel. The education and training standards will be administered by Treasury.
    • If you were not individually registered with the TPB prior to 1 January 2022 and were being supervised, then you will no longer be able to provide tax (financial) advice, unless you complete the steps outlined in Stage 1 which we will discuss further below.
    • If you are an accountant/tax agent and a financial adviser, you will not be deemed registered with ASIC under the Better Advice Act. If you are an accountant/tax agent you will still need to maintain your registration with the TPB.

Understanding Stage 1

    • If you were not individually registered with the TPB prior to 1 January 2022, part of the Stage 1 process requires the AFSL holder to commence the registration process via ASIC Connect. AFSL holders will need to make a declaration, among other things, that their relevant providers satisfy the education and training requirements set out in the Relevant Providers Determination. The Relevant Providers Determination can be accessed by clicking here. Part of meeting the education requirements will also mean completing a tax and commercial law subject and passing the FASEA exam. Advisers who have commenced studying as part of the Graduate Diploma of Financial Planning may be able to rely on those subjects if they have completed the relevant required subjects as part of the course. If the adviser does not hold these qualifications, then the AFSL holder cannot make the declaration.
    • For existing advisers who were not deemed by 1 January 2022, they will have until 31 December 2025 to complete the required tax and commercial law courses.
    • There are new CPD requirements for deemed providers. Advisers will have to complete an additional five hours each year of continuing professional development requirements to maintain their capabilities to provide tax (financial) advice services. The additional 5 hours per year must be technical competence (tax specific) CPD. According to Treasury, this will commence in 2023, please click here for more detail.
    • From 1 January 2023 you must be on the Financial Adviser Register and registered with ASIC as a relevant provider to continue to provide tax (financial) advice and we will discuss some of these steps in more detail below. We expect groups such as Kaplan will make changes to their process to reflect this.
    • For deemed providers, deemed registration involves a one-off transfer of registration from the TPB to the FAR. ASIC and the TPB will share the information on their registers to complete this process and they will also write to individual advisers and AFSL holders in the first quarter of 2022 to confirm the accuracy of their information as part of Stage 1. Deemed providers will not need to lodge Stage 1 registrations with ASIC.
    • Advisers who are deemed advisers will need to make sure all the information on the FAR is up-to-date before this happens. If you are an adviser whose name is in the FAR twice for whatever reason, we recommend you ensure your details are correct on both entries. If you are one of these advisers, you can call our office to discuss. You will need to ensure your details are correct by logging into ASIC Connect and the “My Profile” section of the TPB website.
    • No fee is payable for deemed registrations as part of Stage 1 however, registration for advisers who were not deemed to be registered by 1 January 2022 will incur a once of $50 application fee and the this can be completed via ASIC Connect. This will be available no later than 1 October 2022 and applications must be completed before 1 January 2023.
    • To be clear, if you provide tax (financial) advice after 1 January 2022 and you are not a deemed provider, you will be committing an offence. AFSL holders should make sure that their advisers are aware of this and do not provide tax (financial) advice if they are not deemed providers. If a client requires tax (financial) advice and the adviser is not a deemed adviser, then that advice will need to be provided by a deemed adviser under the AFSL.

Understanding Stage 2

    • Stage 2 commences once the FAR has been transferred to the ATO as part of the Australian Business Registry Service (ABRS) and it is anticipated this will be no later than Oct 2025.
    • Other changes which will be made to the FAR include whether an adviser can provide tax (financial) advice. The 'Registration' field will be made available to the public from 1 January 2023, being the date on which it becomes a requirement that relevant providers be registered with ASIC.
    • The 'Can provide tax (financial) advice services' field will be made available to the public one month after the 'Appoint' and 'Maintain' functions on ASIC Connect have been updated to enable AFS licensees to record that financial advisers can provide tax (financial) advice services. These functions are expected to be available in the first quarter of 2022. We expect ASIC will make further announcements when this is available.
    • If you want to register early to confirm you can provide tax (financial) advice services, you will be able to once changes have been made to ASIC Connect, specifically when the “Appoint” and “Maintain” functions have been enabled which should be early in 2022.