FPA wins on alienation
The Financial Planning Association (FPA) has scored a massive victory in its battle against alienation of personal services income legislation, managing to obtain what is known as a “look through provision” into the legislation.
The eleventh hour announcement made by Treasurer Peter Costello came after about a year of political wrangling between the FPA, the Federal Government and trhe Australian Tax Office (ATO).
FPA chief executive Ken Breakspear says the proposed changes to the legislation will mean financial planners who run their own businesses will be treated the same as other professionals under the alienation law.
Breakspear says the “look through provision” will save 12,000 financial planners considerable cost and time in preparing detailed applications for a determination exempting them from the alienation law.
He says the provision will also mean a smoother transition for thousands of small business multi-agents who would have inadvertently been dragged into the alienation net by adhering to the new Financial Services Reform regime.
Breakspear says financial planners operate similar business structures to other services providers including doctors, lawyers and accountants. He says the only factor that separates financial planners is the method in which they receive payment for services under the Corporation Law requirements.
In a statement released by the Treasurer’s office last Friday, the suggested amendments applied from July 1, to agents who receive personal services income from providing services (on behalf of the principal) to customers, and less than 80 per cent of that income is from services provided to each customer.
The new changes will also apply to agents who receive at least 75 per cent of that income as commission or results-based payments, as opposed to retainers or salary-like payments. Agents who are actively seeking customers for their principal and agents who do not provide services from the premises of their principal (or principal’s associate) also fall under the new legislative changes.
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