By Mark Ellem
The accountants’ licensing exemption (Regulation 7.1.29A of the Corporations Act) permitted a recognised accountant, being a full member of CPA Australia, Chartered Accountants Australia and New Zealand or the Institute of Public Accountants who holds a practising certificate, to recommend the establishment or winding up of an interest in an SMSF without being licensed under an Australian Financial Services (AFS) licence. This exemption expired on 30 June 2016.
Under the limited license option, a recognised accountant will be able provide a broader range of financial product advice than under the accountants’ exemption. From 1 July 2016 to be able to make a recommendation to wind up an SMSF, an accountant will need to be appropriately licensed.
As an unlicensed accountant, you can attend to the compliance and taxation requirements of the wind up of an SMSF, once the decision has been made by the trustee to wind it up. However, it would be prudent to have clear evidence that you did not make a recommendation to wind up the SMSF or provide information that influenced the trustee(s) to wind up the SMSF.
Consider the following scenario:
A husband and wife approach you for tax compliance support. They have an SMSF with less than $100,000 in assets and it is quickly apparent that it is not the best option for them.
As an unlicensed accountant, are you able to suggest that they wind it up?
In this scenario a suggestion to wind up the SMSF, as it’s not the best option for them, would be viewed as a recommendation to wind up the SMSF and consequently would mean that the accountant has illegally provided financial product advice as an unlicensed adviser.
Compare this to the following scenario:
You have an SMSF client with one member, who is also a director of the corporate trustee, together with his son. The son contacts you to advise that his parent, the sole member of the SMSF, has died and he does not wish to continue with the SMSF. He seeks your help with payment of the death benefit and wind up of the SMSF.
Can you advise the son on the death benefit payment and wind up?
As the decision to wind up the SMSF has been made by the trustee, the request is for taxation and compliance services. In fact, once the death benefit has been paid and there are no members left, it is likely that the SMSF’s Trust Deed will require the fund to be wound up and consequently you are merely providing services to help the trustee comply with the Trust Deed and lodgement requirements. In this scenario, as an unlicensed accountant, you would be permitted to:
- Advise on the compliance requirements to pay out the death benefit;
- Calculate the amount of the death benefit and the relevant tax components;
- Advise on the taxation consequences of the death benefit payment;
- Advise on the taxation and compliance requirement of winding up the SMSF;
- Prepare the final set of Financial Statements for the SMSF and arrange the final independent audit; and
- Prepare the final SMSF Annual Return and lodge with the ATO.
As a general rule of thumb, if you are being pro-active about winding up a SMSF, then you will need to be appropriately licensed, however, if you are being reactive and simply taking care of the compliance and paper work, then you can attend to the wind up without the need to be licensed.
