Copping a Serve
We have seen the headlines and heard many tales from the discoveries during the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Not many in the banking and finance sector escaped without a serve from the Commission. The hearings and eventual conclusion is still ongoing, but already, some of the institutions responsible for the unsavoury practices that came to light are in some way getting their just desserts by way of paying compensation to present and past customers.
What to do if you think you deserve a piece of the cake?
If you have been a customer with any of the institutions with misconduct raised at the royal commission, one of the first steps would be to find your old paperwork, contact the bank, broker or agent to make sure they have your current details. This will go some of the way to make sure any compensation cheque gets sent to the right place. While the headlines were heartbreaking, the misconduct may not have been across the board and not everybody will be receiving a slice of the compensation cake, but better to keep your information up to date just in case.
You may have to give up the cherry on top
Depending on the reason behind your compensation and if you have previously claimed a tax deduction for the fee, the ATO may need to be invited to the party.
The National Tax & Accountants Association wants taxpayers to know that if they are receiving compensation as a result of receiving advice from the bank that was found to be inappropriate or paying for advice that they did not receive, there may be tax consequences.
A short, and very general answer, where the fee was claimed as a deduction or any part of the related investment (dividends or proceeds/loss on sale) was included as taxable income, the compensation is likely to have taxable consequences.
Recommendation would be that if you receive compensation as a consequence of the banks being on the chopping block, speak with your tax agent to discuss whether you or the ATO get the cherry on top of the compensation cake.
In a Nutshell…
The Royal Commission is not yet over, there is likely to be more findings, conclusions and consequences for all involved. If you are not sure how this will affect you, run through the checklist:
- Make sure any and all of your previous financial service providers have your current contact details
- If you receive compensation, call or email Wall Business Services to discuss any tax implications
- Review your financial holdings, ensure that you are paying for what you need and actually getting what you pay for. Particularly for:
- Bank Accounts
- Always, know what you are signing up for. Never sign on the dotted line if you do not understand exactly what and where your money is going.
More information is yet to come to light while the Royal Commission continues. To find out more or read the executive summary of the findings to date, details are available here