As highlighted in our March Newsletter, from 1 July 2016, SMSF accountants will no longer be able to advise clients on Self Managed Superannuation Funds (SMSFs) unless registered as an Australian Financial Securities Licensee (AFS Licenced Accountant).
At Stanley & Williamson, we are registered and will continue to be registered to provide SMSF advice to all our clients, as we have for over 25 years.
Unfortunately, this change in licencing, and the required documentation that is now imposed on us by the Government, will mean that the cost of setting up a new SMSF will increase, and the process will become more complex. This is due to the new laws requiring us, as AFS Licenced Accountants, to review and document your financial situation before determining whether an SMSF suits you.
The AFS licenced accountant will also be legally required to issue you a Statement of Advice (SOA) before an SMSF can be set up. An SOA takes a substantial amount of time to prepare, as there are set procedures that need to be followed and paperwork supplied to you per the ASIC regulations.
Below are examples of what accountants (licenced and unlicenced) can advise their clients concerning SMSFs after 1 July 2016.
AFS Licenced Accountants can advise on the following:
- Setting up an SMSF
- Whether to start or stop an account-based pension account
- Contribution levels and amounts
- SMSF investment strategies
Unlicenced Accountants can only provide you with the following:
- Tax calculation and tax advice relating to your SMSF
- SMSF year-end accounting, compliance and administration
- Information on compliance and regulations relating to SMSFs
According to ASIC, SOAs should cost between $2,000 and $4,000 (for comprehensive advice required to consider whether the set-up of an SMSF is relevant to you). This cost exceeds the actual costs of physically setting up the superfund. The extra costs relate only to giving advice to set up the fund. There will also be additional costs for the advice, implementation, and ongoing administration of an SMSF (e.g., starting a retirement pension account).
Accordingly, the cost to advise on and manage your SMSF will increase significantly from 1 July. Unfortunately, this has been imposed on the accounting industry, and ASIC says they will closely monitor all accountants to ensure compliance. It is vital for all concerned that the new rules are adhered to.
We will keep you updated on the changes and requirements in the SMSF space, particularly as we get closer to the 1 July changeover. Meanwhile, please do not hesitate to contact us with any queries.
Kreston Stanley Williamson Team
*Correct as of June 2016
Disclaimer – Kreston Stanley Williamson has produced this article to serve its clients and associates. The information contained in the article is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas in this article, you must seek advice about your circumstances. Liability is limited by a scheme approved under professional standards legislation.