FPA calls for update to tax status of advice fees

FPA quality of advice review

17 June 2022
| By Laura Dew |
image
image
expand image

All financial advice should be tax-deductible to improve the advice gap, according to the Financial Planning Association of Australia’s (FPA) submission to the Quality of Advice review.

In its submission, it said the regulatory system needed to be flexible to stimulate competition and ensure all registered relevant providers had the ability to provide limited scope advice, regardless of the business model they operated under, for the benefit of consumers.

Tax deductibility of initial advice fees would offset and clarity around the tax status of ongoing advice fees would offset a proportion of the price differential between registered relevant providers and non-relevant providers and unregulated advice, according to the FPA.

Currently, tax status was based on a 25-year old determination where ongoing fees were tax deductible but the fee for a preparation of an initial financial plan was not.

The FPA said: “All financial advice should have tax deductible status to help make financial advice accessible and affordable for all Australians. This should be regardless of the stage in the financial advice process it is provided, and whether it directly relates to the creation of investment income.

“Treating the creation of an initial financial plan in a different fashion to that of ongoing advice provides a disincentive for Australians to seek ‘episodic’ financial advice which will assist them to actively plan, save and secure their financial future. It also acts as a further barrier for Australians who have not previously sought or received financial advice.”

Increasing the accessibility and affordability of financial advice would help Australians to become more financially literate, especially for those in retirement, it said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

GG

So shareholders lose a dividend plus have seen the erosion of value. Qantas decides to clawback remuneration from Alan ...

2 months 2 weeks ago
Denise Baker

This is why I left my last position. There was no interest in giving the client quality time, it was all about bumping ...

2 months 2 weeks ago
gonski

So the Hayne Royal Commission has left us with this. What a sad day for the financial planning industry. Clearly most ...

2 months 2 weeks ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

4 days 5 hours ago

ASIC has cancelled the AFSL of a $250 million Sydney fund manager, one of two AFSL cancellations announced by the corporate regulator....

4 weeks ago

Having divested its advice business in August, AMP is undergoing restructuring in at least four other departments amid a cost simplification program....

3 weeks 3 days ago