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NEWS - PLANNING
Financial planners likely to get a reprieve
5/18/2001
The Federal Government looks set to give a reprieve to the tax-avoidance crackdown for the financial planning industry, as the Prime Minister, Mr John Howard, indicates the legislation could impose a hefty compliance burden on some small planners.
Howards comments indicate that the Government is preparing more concessions to its Alienation of Personal Services Income legislation, which is designed to impose income tax on many contractors who are de facto employees.
But the Government has already offered substantial concessions to the industry following backbench pressure, allowing many contractors to be excluded if they satisfied one of four tests.
In a meeting with the FPA last week, Mr Howard said that, if its submission was accurate, the legislation appeared to impose unintended consequences.
The Prime Minister also acknowledged that the legislation would "impose a significant compliance burden on the small business financial planner", according to a statement released yesterday by the FPA.
The chief executive of FPA, Mr Ken Breakspear, described the meeting with Mr Howard as "very positive" saying Mr Howard's understanding of the issues was excellent and he vowed to investigate the matter and provide a response within three weeks.
A combination of the alienation law and the corporations law resulted in small business financial planners being unfairly trapped.
He said these planners were forced to comply with the requirement in the corporations law which meant that all income derived from clients had to be funnelled through a dealer group.
A report prepared by Access Economics estimated that the alienation legislation could cost the financial advisory profession around $120 million in the first year and $150 million a year thereafter.
It is unlikely that any response will be contained in next week's Budget.
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