The Australian Securities and Investments Commission (ASIC) today issued guidance about the application of the Corporations Act to people who provide taxation related advice.

The guidance is given in the form of answers to two new frequently asked questions (FAQs):

• ‘Do I need an AFS licence to provide tax advice?’ (QFS 149): and
• ‘I am a financial planner. What particular requirements apply to me under the Corporations Act when I give advice about the tax implications of financial products?’ (QFS 153).

Mr Mark Adams, ASIC Director Regulatory Policy, said the FAQs should help taxation advisers and financial planners understand some of the compliance obligations that apply under the Corporations Act.

‘QFS 149 explains when a taxation adviser requires an Australian financial services licence while QFS 153 provides guidance about how licensed advisers who do need to consider taxation issues can comply with their obligation to provide appropriate financial product advice’, Mr Adams said.

ASIC foreshadowed the issue of this guidance in a joint release with the Australian Tax Office issued in December 2003 (see Media Release 03-419: ASIC and ATO team up on advice guidance). ASIC notes the ATO is considering comments on its draft determination, TD 2004/D22: ‘Income tax: does paragraph 251L(1)(b) of the Income Tax Assessment Act 1936 prevent persons other than registered tax agents from giving advice about a taxation law’ that was issued on 30 June 2004.

‘These FAQs, together with any guidance issued by the ATO, will help give a clearer picture of how the taxation and financial services laws apply to the provision of taxation advice’, Mr Adams said.

Background

The FAQs issued today build on:

• earlier publications issued by ASIC between 2002 and 2004 on the financial services reform regime (such as Policy Statement 175: Licensing: Financial product advisers — Conduct and disclosure, issued in 2003); and
• clarifications to the Corporations Regulations about which services are exempt from being a financial service (such as amendments to regulation 7.1.29 in February 2004).

For a copy of these new FAQs and for other financial services publications, go to the Financial Services homepage of the ASIC website at www.asic.gov.au/fs.

End of release

Read our answers to these FAQs:

• Do I need an AFS licence to provide tax advice? (QFS 149): and
• I am a financial planner. What particular requirements apply to me under the Corporations Act when I give advice about the tax implications of financial products? (QFS 153).