How do I know if I am covered?
The first step is to look at your existing cover and see whether it extends to the provision of tax advice. If it does not, once registered, you may continue to use your existing cover until it needs renewing, at which point you need to put in place arrangements that cover tax advice. This may be by restructuring your policy or obtaining additional cover. The TPB Chair, Mr Ian Taylor has stated that -
"for the vast majority of financial advisers, we [the TPB] do not expect that tax (financial) advisers will need to get additional PI insurance policies to what they might already hold to meet ASIC's requirements. We understand that any increase in PI insurance premiums will only relate to extending PI insurance policies to cover tax advice if they do not already do so."
Exceptions to the rule – PI cover not required if:
- covered by a policy held by another registered tax adviser entity;
- not receiving a fee for services;
- exclusively providing in-house tax services; or
- receiving an honorary reward for your services (eg. voluntary provision of tax services to a not-for-profit entity).
Implementation Process:
Registration Requirements:
| Date | Ongoing Requirement |
| 1 July 2014 – 31 December 2016 | Must have PI cover within 14 days of notification of registration. Pre-existing PI cover will be adequate until the earlier of when it comes up for renewal, or 1 January 2017, after which PI cover must comply with TPB requirements. |
| 1 January 2017 | Must have PI cover that meets TPB requirements |
Example 1:
ABC Financial Planning Pty Ltd (ABC) holds an AFSL and has
current PI cover for financial planning, but it does not extend to
providing a tax (financial) advice service. The cover lapses on 31
December 2014.
ABC notifies the TPB on 1 July 2014 and is deemed to be registered
under the transitional arrangements. As ABC's cover lapses on
31 December 2014, it must arrange for PI cover that meets the TPB
requirements by this date.
Example 2:
XYZ Financial Planning Pty Ltd (XYZ) is in the same situation but its cover does not lapse until 30 June 2017. XYZ must arrange PI cover that meets the TPB requirements by 31 December 2016.
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.
