Planners lash out at soft dollar taxing plans
Financial planning dealer groups have hit out at plans by the Australian Taxation Office (ATO) to target a new public register of soft dollar commission payments.
As reported by Money Management last week, the ATO is considering whether to monitor the register where financial planners will have to disclose any soft dollar payments they receive from January 1, 2005.
Fiducian Financial Services managing director Indy Singh told Money Management the idea of monitoring the register with a view to taxing soft dollar payments is misguided.
Planners must already declare some soft dollar payments via income tax returns, and Singh says the ATO’s plan to reap revenue by hitting the soft dollar register could prove fruitless.
“My question to the ATO is ‘how is it being hidden?’” he says.
Singh says the ATO would be better placed to consider where most of the soft dollar commissions come from.
“Much of these soft dollar cruises and airfares comes from the big end of town — none of the small people can afford to do it,” Singh says.
Aon Financial Planning and Protection managing director Greg Dunger says industry groups like the Financial Planning Association (FPA) need to take the issue up with the ATO to seek clarification on the possible implications of the crackdown.
“The problem is you’re putting a tax issue and a legislative issue into a washing machine and swishing them around. It’s like putting in something that’s red and something that’s white and both of them coming out pink,” Dunger says.
Both the FPA and the Investment and Financial Services Association (IFSA), which drew up plans for the register, have confirmed they are in ongoing discussions with the ATO on the matter.
The associations created the register as part of a new industry code of practice to counter intense public criticism over soft dollar payments in the financial planning industry.
But Dunger says news of the planned tax crackdown could hurt efforts to clean up soft dollar payments in the financial planning industry.
“There are certain ways of looking after consumers, but if you’re going to bring in a draconian type approach to tax on it, then are you really rewarding people for the right behaviour?” Dunger says.
Singh agrees any move by the ATO could derail the industry’s work on soft dollar disclosure.
“They have actually wound it back to square one again,” he says.
Recommended for you
Professional services firm AZ NGA has announced a group chief financial officer, who previously spent six years as Fitzpatricks Financial Group’s CEO.
Clime’s disposal of advice licensee Madison “needed to happen yesterday”, managing director Michael Baragwanath has told Money Management, as he concludes a severe cost-out period at the business.
As Viola Private Wealth continues on its growth trajectory, the wealth management firm has appointed a seasoned investment professional to be its first chief investment officer.
Financial advisers who wish to implement artificial intelligence in their practices need to undergo a change in their mindset as to how they use technology.
