Go to top of page

Appendix A

Meaning of 'tax (financial) advice service' and 'fee or other reward' for Australian financial services licensees

Meaning of tax (financial) advice service

A tax (financial) advice service consists of five key elements:

  1. a tax agent service (excluding representations to the Commissioner of Taxation)
  2. provided by an Australian financial services (AFS) licensee or representative of an AFS licensee
  3. provided in the course of advice usually given by an AFS licensee or representative
  4. relates to ascertaining or advising about liabilities, obligations or entitlements that arise, or could arise, under a taxation law
  5. reasonably expected to be relied upon by the client for tax purposes.

For further explanation about what is a tax (financial) advice service refer to Table 1 below and to our website TPB(I) 20/2014 What is a tax (financial) advice service?
 

Meaning of fee or other reward

The phrase ‘fee or other reward’ is not defined in the Tax Agent Services Act 2009 and the TPB is of the view that:

  • A fee, among other things, is a payment for services. A service is taken to be provided for a fee even if the fee for the tax (financial) advice service is bundled with other fees for other services.
  • A reward, among other things, as something given or received in return, or recompense, for service, merit, hardship, etc. The phrase ‘or other reward’ recognises situations where services are provided for a reward other than a financial reward, for example when bartering tax (financial) advice services for goods or other services.
  • A ‘fee or other reward’ specifically excludes employees (who are unregistered) who provide tax (financial) advice services on behalf of, or to, their employer(s) for a salary, wage or other benefit. Other benefits paid to employees would include, but are not limited to, fringe benefits, commissions, bonuses and incentives.

For further explanation about types of transactions and arrangements that may constitute a fee or other reward refer to Table 2 below and to our website TPB(I) 22/2014 Fee or other reward for tax (financial) advisers
 

Table 1: Examples of a tax (financial) advice service

The following table contains a non-exhaustive list of the types of services commonly provided and whether they constitute a tax (financial) advice service.

Service

Tax (financial)
advice service

Personal advice (as defined in the Corporations Act 2001), including scaled advice and intra-fund advice, which involves the application or interpretation of the taxation laws to a client’s personal circumstances and it is reasonable for the client to expect to rely on the advice for tax purposes.

 

Yes

Any advice (other than a financial product advice as defined in the Corporations Act 2001) that is provided in the course of giving advice of a kind usually given by a financial services licensee or a representative of a financial services licensee that involves application or interpretation of the taxation laws to the client’s personal circumstances, and it is reasonable for the client to expect to rely on the advice for tax purposes.

 

Yes

Factual tax information which does not involve the application or interpretation of the taxation laws to the client’s personal circumstances. Such information could be included in, but is not limited to:

  • regulated disclosures such as product disclosure statements and financial services guides
  • other products such as general marketing and promotional materials.

 

No

Client tax-related factual information. Such information includes, but is not limited to:

  • payment summaries
  • other documents such as annual summary of interest paid and account statements.

 

No

General advice (as defined in the Corporations Act 2001).

No

Any service that does not take into account an entity’s relevant circumstances so that it is not reasonable for the entity to expect to rely on it for tax purposes. This includes simple online calculators as defined in the Australian Securities and Investments Commission’s Class Order (CO 05/1122).

No

Factual information provided by call centres and front line staff and specialists that would not be expected to be relied upon for tax related purposes.

No

Preparing a return or a statement in the nature of a return (to provide this service would require registration as a tax agent).

No

Preparing an objection under Part IVC of the Taxation Administration Act 1953 against an assessment, determination, notice or decision under a taxation law.

No

A service specified not to be a tax agent service in Regulation 13 of the Tax Agent Services Regulations 2009.

No

Dealing with the Commissioner of Taxation on behalf of a client. This may include, for example, applying for a private binding ruling on behalf of a client.

No

 

Table 2: Examples of fee or other reward

The following table contains a non-exhaustive list of the types of transactions and arrangements that may constitute a fee or other reward.

 

Transaction/arrangement

Fee

Other reward

1

An employee representative provides a tax (financial) advice service, on behalf of, or to, their employer who is a registered tax (financial) adviser.

No

No

2

An entity provides a tax (financial) advice service for a fixed amount.

Yes

No

3

An entity provides a tax (financial) advice service for a time based amount (for example, an hourly rate).

Yes

No

4

An entity provides a tax (financial) advice service for an asset based amount (for example, calculated as a percentage of the client’s assets).

Yes

No

5

An entity provides a tax (financial) advice service (in the form of a statement of advice) together with other services. The entity bundles the fees and charges a single amount to the client for all the services.

Yes

No

6

An entity provides a tax (financial) advice service for an amount, part or all of which is payable via a third party. For example, an authorised representative provides a tax (financial) advice service and receives an amount that has been passed on by their Australian financial services licensee and/or corporate authorised representative (who may or may not retain a portion of that amount).

Yes

No

7

An entity provides a tax (financial) advice service in exchange for other goods and/or services (non-dollar benefits). This may include, for example, a bottle of wine or use of a holiday home as recompense for advice provided.

No

Yes

8

An entity provides a tax (financial) advice service in lieu of payment of an existing third party debt, or for a future benefit.

No

Yes

9

An entity provides a tax (financial) advice service for an amount that is calculated, or to be calculated in the future, based on certain conditions being satisfied or not satisfied.

Yes

No

10

An entity provides a tax (financial) advice service which consists of tax advice in relation to certain financial products. Upon receipt of this advice, the client invests in the financial products, which triggers a commission payable to the entity.

Yes

No