Prime Minister John Howard has agreed to deliver a verdict on the issue of Alienation of Personal Services Income (APSI) within the next three weeks.
The Prime Minister’s promise to finalise the law and give a definitive answer to the Financial Planning Association (FPA) members will end months of confusion and extensive lobbying efforts.
Last Friday the Prime Minister met with FPA chief executive Ken Breakspear and chairman John Hewison to discuss sections of the law that have caused chaos and confusion within the industry since early last year.
The meeting was the first sign that the government is keen to hear the financial services industry’s pleas.
Despite previous lacklustre support from government bodies, such as the Australian Tax Office (ATO), Hewison described the meeting with the Prime Minister as very positive.
“We are very confident. We couldn’t have come away from the meeting without a better result,” Hewison says.
He says the Prime Minister demonstrated a good understanding of the issues and expressed a “personal undertaking to discuss our concerns with Treasurer Peter Costello”.
“He [the Prime Minister] told us he would get back to us within three weeks,” Hewison says.
“For the next three weeks we’ll communicate with the Treasurer, and offer him feedback and any assistance,” he says.
Breakspear, who has been at the forefront of the APSI lobbying, says the Prime Minister stated that if all the FPA’s submission on the structures and income sources from clients within the industry were true then it would appear to be a case of “unintended consequence”.
The Prime Minister also recognised that the current legislation would mean a significant compliance burden on the small business financial planner, according to Breakspear.
The major issues that have caused the rigorous lobbying to government has been the ATO’s interpretation that small business financial planners derive their income from one source – the dealer groups, rather than their clients.
Another issue is the current Corporations Law structure. At present the law requires all income derived by financial planners from their clients, be funnelled through the dealer group. This then sees small business financial planners unfairly forced to seek a costly determination of their business status.
