INTHEBLACK June 2025 - Magazine - Page 22
FEATURE
WHAT PART DO
ACCOUNTANTS’
CERTIFICATES PLAY?
Accountants’ certificates remain
an obligatory part of the process
for investors to be classified
as being sophisticated.
However, the criteria for providing
them remain opaque.
For example, some accountants
are known to include the value
of an individual’s home in their
asset calculations while others
exclude the home. In terms of
gross income thresholds, some
accountants also include income
beyond wages such as franking
credits and other one-off income.
“It’s not a very well-policed
or well-regulated framework
to begin with,” says Richard Webb,
CPA Australia’s superannuation
lead, policy and advocacy.
“Some firms do the process very
well, though it can be a distraction
from the majority of the work that
they do. Other firms come across
these certificates less frequently
and may not be fully aware
of the role that they play.
“Our position on this is that
accountants’ certificates should
probably be abolished.”
22 INTHEBLACK June 2025
OVERSEAS EXPERIENCES
The parliamentary inquiry heard concerns
from some investment industry participants
that increasing the test thresholds could
have unintended consequences, based
on overseas experiences.
In 2023, to account for inflation,
the United Kingdom adjusted a number
of the thresholds for its wholesale investor
and client tests by increasing the thresholds
for its income (high net worth) test from
£100,000 to £170,000 and assets test
from £250,000 to £430,000 respectively.
However, due to the negative impact
of the increases on the investment funding
of start-up companies and early-stage
venture capital funds, the UK government
reversed the changes only three months
after implementation.
“Australia is not [currently] out of step
with international markets regarding our
wholesale tests,” says Alternative Investment
Management Association regulatory
committee member, Paula McCabe.
“While there is some divergence in terms
of the numbers used to meet income tests
or the assets test, almost all comparable
jurisdictions do use one such test or more.”
However, O’Neill points out that the
subjective character of the SIT “increases
the potential for conflicts of interest,” given
it would generally be in the interests of
product issuers for an investor to be classed
as sophisticated so they can be sold wholesale
investment products and services.
“At the end of the day, CPA Australia’s
position is unchanged,” says Webb. “We’d
like to see, wherever possible, the same
kinds of protections for retail investors
extended to wholesale investors.
“The amount of money that you have
to invest shouldn’t really preclude you
from getting access to decent consumer
protections.” ■
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