The amendments received a lot of backlash from various audit firms, which argued it was an arbitrary figure that would unfairly impact smaller and new firms.

Speaking at the SMSF Association National Conference, SMSF Association deputy chief executive Peter Burgess said the 20 per cent threshold is designed to mitigate or reduce the independence risk associated with auditors generating a significant amount of their income from one or a small number of clients.

“They talked about this 20 per cent rule so that if you’re getting more than 20 per cent of your fee come from one client, then you need to put in place safeguards to reduce the independence risk associated with that, and if you can’t mitigate that risk, then you need to refuse the engagement,” explained Mr Burgess.

However, following feedback from the SMSF Association and others in the industry, Mr Burgess said the APES Board are planning to make some revisions to the amendments.

“They’re looking to increase that 20 per cent threshold to 30 per cent, and they’re also looking to introduce a five-year transition period for new firms as well as existing firms,” he said.

“So existing firms will have five years from 1 January 2023 to monitor and plan.”

Mr Burgess said the SMSF Association intends to support the proposed revisions.