Since the FATLEO Test, the TPB have released further guidance on what they will and won't consider is a tax (financial) advice service.
By way of reminder, if you are a:
Financial Adviser who:
-Ascertains/advises on
- Taxation:
- Liabilities; or
- Entitlements; or
- Obligations
... you are likely to be providing a tax (financial) advice service.
However, what the FATLEO test doesn't tell us is what is the scope of "advice"... The TPB have now released guidance on this topic.
The two questions to consider when determining whether you provide a tax (financial) advice service are:
- Is the information provided factual tax information, or is it tax law interpretation?
- Is the information tailored to the client's personal circumstances?
If the information is not tailored to the client and only factual information, then it is not considered tax (financial) advice.
Take the following examples:
Example 1:
You provide a general financial advice service such as an online
calculator, or call centre that takes into account tax information
as one part of the service (eg. stating that premiums for salary
continuance insurance can be tax deductible).
It is likely you will not be providing a tax financial advice service and not need to be registered as a tax (financial) adviser.
Example 2:
You are a financial planner that, in the course of providing
personal financial advice, advises the client to consider salary
continuance insurance. You mention that premiums for salary
continuance insurance can be tax deductible.
Provided you do not start applying those benefits to the client's personal circumstances it is likely you will not be providing a tax financial advice service.
Example 3:
You are a financial planner that provides personal financial
advice to a client on their salary continuance insurance needs. You
advise them that in their situation a tax deduction of a particular
amount would be available and that is one of the reasons why they
should consider salary continuance insurance.
In this situation, you are applying taxation information to a person's personal circumstances in a context where it is reasonable to assume they will rely on your advice. You will be providing a tax (financial) advice service and subject to the TASA regime.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
