Three Perspectives: Why Verification Depth Matters

Why We Sometimes Ask for More

You've provided your documents. You know your situation. So why does your adviser keep asking questions? This guide explains the three perspectives at play: what you reasonably believe you've provided, what your adviser needs to understand, and why the regulatory framework requires this depth of inquiry. Understanding these perspectives helps explain why a thorough Foundations review takes the time it does.

👆 Select each view above to explore the three perspectives

Your Perspective: "I've Provided Everything Relevant"

You know your situation. You've gathered your official documents — the ones that matter. You've thought about what's relevant to the advice you're seeking. This is a completely reasonable position.

📄 Example: Division 293 Tax

What you provide:

"Here's my ATO Notice of Assessment. It shows my taxable income was $265,000 last year. I know I pay that extra super tax—Division 293—and I usually just let the ATO take it from my super. Is there anything I should be doing differently?"

👁️ What you've given us

The key facts: Income over the $250,000 threshold. Subject to Division 293 tax. Currently paying from your super balance. Looking for optimisation opportunities.

This seems comprehensive — and in many contexts, it would be. Your ATO assessment is the final word on your tax position for the year. It's the document you use for loan applications, rental applications, and a dozen other purposes. Why would a financial adviser need anything more?

Why This Feels Complete

Your Notice of Assessment is an official government document. It's the definitive summary of your year's tax position. You've done the right thing by providing it — and your assumption that it should be sufficient is entirely reasonable.

A Fair Question

"If the ATO has calculated everything and sent me a final notice, surely that contains all the information a financial adviser would need about my tax situation?"

So Why Might We Ask for More?

You're not wrong to think this way. But an ATO assessment shows the outcome of a tax calculation — not the inputs, the structure, the history, or the forward implications. The next section explains what an adviser is actually looking for, and why.

Your Adviser's Perspective: "We Need to Understand More"

When we ask follow-up questions, we're not questioning your honesty or competence. We're recognising that good advice requires understanding the structure behind the numbers, the history that led here, and the implications going forward.

📄 Example: Division 293 Tax — What We Need to Understand

You've provided your ATO assessment. Here's what we're now thinking about:

📄 Questions Your Assessment Doesn't Answer

Before we can advise you properly, we need to understand:

What the assessment doesn't show us:

The components of your Adjusted Taxable Income (ATI) — which may differ from taxable income
Whether you received a separate Division 293 notice (and its amount)
The breakdown of your concessional contributions by source
Any defined benefit fund memberships (with deferred debt accounts)
Prior year ATO debts or payment arrangements
Entity structures through which your income flows

🏛️ The Bigger Picture We're Building

For comprehensive advice, we need to understand your strategic context:

Forward-looking questions:

Was this year's income typical, or inflated by a one-off event?
What's your likely income trajectory for coming years?
Are you using carry-forward concessional contributions?
How does salary sacrifice interact with your Division 293 position?
Would contributions to a spouse account be beneficial?
Is there a defined benefit debt account growing with interest?
What's your Medicare Levy Surcharge position?
How do reportable fringe benefits affect the calculation?

📊 Division 293 Income Calculation — The Hidden Complexity

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The ATO calculates Division 293 income using the same method as the Medicare Levy Surcharge (disregarding reportable super contributions). This includes:

Taxable income (assessable income minus allowable deductions)
Total reportable fringe benefits
Net financial investment losses
Net rental property losses
Net amount on which family trust distribution tax has been paid
Super lump sum taxed elements with a zero tax rate (subtracted)
Assessable First Home Super Saver released amounts (subtracted)

We can't determine your Division 293 liability from an ATO assessment alone — it requires understanding these components and how they interact with your specific circumstances.

Source: ATO — Division 293 tax on concessional contributions →

🏦 Defined Benefit Complications — A Hidden Trap

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If you're a member of a defined benefit fund, Division 293 becomes significantly more complex:

The ATO maintains a debt account for deferred Division 293 tax in your name
End of year interest accrues at the 10-year Treasury bond rate (4.29% for 2024-25)
This debt compounds year after year until a benefit is paid from the fund
You cannot access these contributions to pay the tax voluntarily
The tax is apportioned between accumulation and defined benefit accounts

You may be completely unaware you have a growing debt account with compound interest. This fundamentally affects retirement planning advice — and it's something your ATO assessment won't tell either of us.

Source: ATO — Division 293 tax rates and thresholds →

"We want to understand what your tax position was, what it is, and what changes have occurred to get where you are now. We need to understand the advantages and disadvantages of your current structures — today, and into the future. Because we're not just documenting the present; we're trying to assess the strength and stability of this foundation stone before we build anything on top of it."

Why the Rules Exist: "Your Adviser Must Demonstrate This"

The regulatory framework isn't red tape for its own sake. It exists to protect you — and it shapes what we're required to do before we can give you advice.

⚖️ The Code of Ethics

All financial advisers in Australia are bound by a Code of Ethics that goes above basic legal requirements. It's principles-based rather than a checklist, requiring us to use professional judgement guided by five values and twelve standards.

The Code requires us to act with integrity, in your best interests, taking into account the broad effects arising from our advice and your broader, long-term interests and likely circumstances. This is why we sometimes ask questions that seem tangential — we're trying to understand your whole picture.

FASEA Code of Ethics Guidance →

📜 The "Best Interests Duty" — What It Actually Means

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The Corporations Act requires your adviser to act in your best interests. To demonstrate this, we must show that we have:

Identified your objectives, financial situation and needs as you've disclosed them
Identified the subject matter of the advice you're seeking
Made reasonable inquiries where information appears incomplete or inaccurate
Assessed whether we have the expertise required to advise you
Conducted reasonable investigation into financial products that might achieve your objectives

The law anticipates that advice can be "scaled" — the scope may be narrow or broad. But whatever the agreed scope, we must act in your best interests within it. This is why being clear about what's in-scope and out-of-scope matters so much.

Corporations Act s961B — AustLII →

📋 When We Agree to Limit the Scope

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Sometimes you might want advice on just one issue, not your whole financial life. That's perfectly valid — ASIC provides guidance on how this works:

The same rules apply to all personal advice, regardless of scope
We must use professional judgement to identify what you're actually asking about
If advice is limited in scope, it must still be in your best interests within that scope
We must warn you if our advice is based on incomplete or inaccurate information
Good record keeping is essential — for your protection and ours

If you provide an ATO assessment but prefer not to share details of your business structures, we need to document this limitation and consider whether we can still give you appropriate advice within that constraint.

ASIC INFO 267 — Tips for giving limited advice →

🏢 The Licence Framework

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Your adviser operates under an Australian Financial Services Licence (AFSL). The licence holder sits between ASIC and your individual adviser, with responsibilities including:

Structuring business operations to help advisers operate ethically
Monitoring and enforcing compliance with the Code of Ethics
Setting minimum expectations for data collection and documentation
Determining what advice and services each adviser is authorised to provide
Interpreting how broad financial services law applies to personal financial advice

This means different advice practices may have slightly different documentation requirements — but all must meet the underlying legal and ethical standards.

If You Provide Incorrect Information

If we've correctly limited the scope of advice, documented that limitation, and you've agreed — our responsibility for outcomes based on facts outside that scope is reduced. But only if we have:

Correctly declared the scope limitation
Sufficiently investigated within the agreed scope
Warned you about the limitations

Why We're Held to a Higher Standard

"Informed consent" in financial advice is complicated by an inherent imbalance. We typically have more knowledge, training and experience than you do in these specific areas. Regulators recognise this — which is why the onus is on us to ensure you genuinely understand what you're agreeing to.

What This Means in Practice

We can't simply accept "I earn $265,000 and pay Division 293 from my super" at face value — not because we doubt you, but because the regulatory framework requires us to make reasonable inquiries. We need to document what's in-scope and out-of-scope, and ensure we have sufficient information to give advice that's genuinely in your best interests — not just advice that sounds reasonable based on incomplete information.

Your adviser stands at the intersection of these three perspectives. Your reasonable belief that your documents should be sufficient. Our professional need to understand the structure, history and implications behind those documents. The regulator's requirement that we demonstrate proper process. Navigating this intersection — with integrity, competence and genuine care for your outcomes — is what distinguishes professional financial advice from mere product sales. When we ask "just one more question," this is why.

— The Foundations Philosophy

The Foundations Series

🏗️ Before You Build 👁️ Three Perspectives (You are here) 🤝 The Shared View

How This Fits Into Our Planning Framework

The Wealth Pyramid™ recognises that each foundation stone — including taxation — needs to be examined from multiple angles. What you believe, what we can verify, and what the regulatory framework requires all inform how deeply we need to investigate before we can advise you with confidence.

The Service Cube™ acknowledges that your Capacity to Care — your knowledge, experience, and available time — shapes how we work together. You might start in a more guided relationship where we do more of the heavy lifting, and move toward a coaching relationship as your understanding grows. The approach we agree on together determines how deeply we investigate and how much we rely on stated versus verified information.

The Wealth Pyramid™ and The Service Cube™ are registered trademarks of WSP Pty Ltd (June 2002, renewed through 2032).

Three Perspectives