INTHEBLACK June 2025 - Magazine - Page 21
“The proposals included suggestions concerning the current requirements for
accountants’ certificates for wholesale investors and clients. The committee did
not reach any conclusive view or recommendations on these matters. However,
the committee acknowledges that the issues identified raise significant policy
considerations for government.”
DEBORAH O'NEILL, PARLIAMENTARY JOINT COMMITTEE ON CORPORATIONS AND FINANCIAL SERVICES CHAIR
losing large sums of money because were
not fully aware of the investments they
were buying into.
Recourse to the Australian Financial
Complaints Authority is provided on
a discretionary basis to sophisticated and
wholesale investors and varies depending
on the specific circumstances.
CALLS TO RAISE THE BAR
In a joint submission to the parliamentary
inquiry, CPA Australia along with Chartered
Accountants Australia & New Zealand,
the Institute of Public Accountants
and the SMSF Association recommended
amendments to the current sophisticated
and wholesale investor client rules,
particularly regarding the thresholds
for each of the tests [see breakout].
Likewise, ASIC recommended increasing
the test thresholds to account for inflation
since their introduction to the Corporations
Act. Based on Consumer Price Index data,
ASIC recommended lifting the product
value test to A$922,000, the individual
wealth test to A$4.61 million, and income
test to A$461,000.
Chair of the parliamentary committee,
Labor Senator Deborah O’Neill, notes
that there was significant stakeholder
interest in reform of the SIT, on the basis
this could provide an alternative to the
wholesale investor and client tests based
on product value, individual income and
assets thresholds.
“The committee therefore considers that
the Corporations Act should be amended
to introduce objective criteria to the SIT,”
O’Neill says. “This will ensure that potential
wholesale investors are not unfairly
or arbitrarily excluded from wholesale
markets, and thereby promote participation
in, and the flow of capital to, Australia’s
wholesale markets.”
Dovetailing into this is the parliamentary
committee’s second recommendation that
the government amend the Corporations Act
to remove the subjective elements of the SIT
and introduce objective criteria that
covers knowledge and experience.
“The proposals included suggestions
concerning the current requirements
for accountants’ certificates for wholesale
investors and clients,” O’Neill says.
“The committee did not reach any
conclusive view or recommendations
on these matters. However, the committee
acknowledges that the issues identified
raise significant policy considerations
for government.”
RECOMMENDED AMENDMENTS
CPA Australia along with Chartered Accountants Australia
& New Zealand, the Institute of Public Accountants
and the SMSF Association, recommended the following
amendments to the current sophisticated and wholesale
investor client rules:
• removal of the requirements for the provision of
accountants’ certificates
• increasing the product value test from A$500,000
to A$1 million and indexing it in line with Average Weekly
Ordinary Times Earnings (AWOTE) in A$100,000 increments
• increasing the net assets test of the individual wealth test
from A$2.5 million to A$4 million and indexing it in line
with AWOTE in A$250,000 increments
• excluding an individual’s principal place of residence from
the net assets test
• increasing the gross income test threshold from A$250,000
to A$350,000 and indexing it in line with AWOTE in
A$25,000 increments
• excluding capital gains, employment termination payments
and franking credits from the gross income financial
threshold
• introducing a requirement for individual consent to be
treated as a wholesale investor or client.
intheblack.cpaaustralia.com.au 21
