The FPA has expressed concern over the treatment of payroll tax to financial planners as authorised representatives of Australian financial services licence (AFSL) holders.
While the association recognises the need for inter-jurisdictional consistency of payroll tax, it believes financial planners have suffered detriment as a result of being bundled in with commonplace contractor relationships under Victorian law, the FPA’s submission to the inquiry into state government taxation and debt said.
“The relationship of an authorised representative to its AFSL holder is substantially different to a typical contractor relationship captured by the law, termed as ‘relevant contract’,” the submission said.
“Relevant contracts include building and construction tradespeople and IT professionals, who operate within very different relationships and structures to those of financial planners.”
There are a number of distinctions for the relationship of authorised representatives to AFSL holders, and therefore the handling of a relationship as a relevant contract should not apply, the submission said.
As authorised representatives own their relationship with their clients, dealings with the representatives’ AFSL holders would be minimal, the FPA said.
“Authorised representatives actively seek and pursue their own client bases in market segments they select. These relationships are inherently different to those of contracting plumbers or builders operating under the licence of registered plumbers or builders,” the submission said.
The FPA has recommended the Victorian government review its position and adopt an approach that recognises the business structure and relationship between authorised representatives and their AFSL holder.
“Harmonising payroll tax definitions across all jurisdictions, whilst maintaining consistency with the highly relevant personal services income tests developed by the ATO (Australian Taxation Office) in consultation with industry, would provide a logical and sensible outcome without unduly disadvantaging any particular industry or providing special treatment to anyone,” the submission said.
