Where tax work ends and financial advice begins

The topic itself is not the test. You can tell a client what the concessional contributions cap is and how salary sacrifice gets taxed without a problem. That is information. The moment you say they should put an extra $10,000 into their fund this year, you have made a recommendation about a product for a person, and that recommendation needs a licence behind it.

Where the line sits

It runs through most of what you do once a client has assets and not just income. Preparing the return is tax work. Modelling the after-tax result of two structures a client is weighing up is tax work. Neither needs an AFSL. Explaining that an account-based pension is taxed differently from a lump sum is fine. Telling a retiree how much to draw, and from which account first, is advice on a financial product, and that is a different job.
Self-managed super is the one that catches people most often, and has done since the accountants' exemption went. Setting up or winding down an SMSF, or telling a client to move money into or out of one, sits squarely inside the licensing rules. A limited AFSL will cover some of it. Plenty of firms decide the volume does not justify holding one and refer the work out instead.

Insurance is the one that slips past you. A client mid-divorce, or a business owner who has just signed for a big loan, will raise life cover or income protection in the same conversation as their tax. Sizing up whether their cover is adequate and pointing them to a type of policy is personal advice on a risk product. You can flag that their cover looks light against their new debts without crossing anything. The recommendation to actually buy belongs with someone licensed.

What the adviser signs up to

The person you refer to carries duties your own engagement does not, and it helps to know what they are before you hand a client over. An adviser giving personal advice owes a best-interests duty under the Corporations Act. The advice has to be built around the client's goals, not the adviser's product range, and where the two conflict the client wins, by law.

There is disclosure to match. Personal advice comes with a written record the client keeps. It sets out what is recommended and why, along with what it costs. Conflicted remuneration, the old commissions that ran from product providers to advisers, is banned on most products, so the client can see the super recommendation is not being paid for by the fund taking the money. These are the things worth checking about any adviser before their name leaves your office.

When the work stops being tax and starts being advice

The trigger is rarely dramatic. A client asks whether to salary-sacrifice more into super before 30 June, how to draw down across an account-based pension and cash without wrecking their tax position, what to do with a sudden inheritance, or how to handle the proceeds of a business sale, and the conversation has quietly moved from lodging returns to personal financial advice that needs an AFSL. Firms without an in-house advice arm usually build a standing relationship with an independent financial adviser they trust to act in the client's interest and report back to the accountant rather than displace them. Solace Financial, a Brisbane firm that holds its own Australian Financial Services Licence (AFSL 509493) and is owned by its principal advisers, is one example of the kind of partner accountants use for this: its advisers cover superannuation, retirement drawdown, personal insurance and the structuring of inheritances and business-sale windfalls, and one of its planners, Joel Carty, is both a Certified Financial Planner and a Chartered Tax Adviser, which makes the handover between the two disciplines less of a translation exercise.

Why build the relationship in advance? Because the ad hoc referral gets made in a hurry, at the point the client is already sitting across from you wanting an answer, and that is exactly when nobody does any due diligence on who they are being sent to.

What a clean arrangement looks like

The conflict shows up the moment your fee for referring is tied to what the client ends up buying. Take a percentage of the funds they place, or a slice of the ongoing advice fee, and you now have a stake in the recommendation the client cannot see. A flat referral fee, written down and disclosed to the client, removes that incentive to nudge them towards something bigger than they need.

Most firms that have thought about it hard land on no referral fee at all. The relationship points the other way. The adviser reports back on what was recommended and why. You keep the tax and compliance work. The client ends up with two professionals who each own their side of the job and can each see what the other did. No one is paid to steer the client anywhere.

The tell, in your own practice, is the second meeting on the same subject. When a client keeps circling the same money question and what they want back is a decision rather than a figure, the work has already changed under you, and the referral is late rather than early.