FPA repeats calls for tax deductible advice
The Financial Planning Association (FPA) has reiterated calls for the preparation of an initial financial plan and ongoing management fees or annual retainer fees to be made tax deductible in its pre-budget submission to the Federal Government.
The latest efforts to push for the proposal came on the back of the FPA’s 10 Point Plan from 2015, and various submissions from the past eight to 10 years, in which it called for the government to begin consultation with the industry to gauge the benefit of making the initial financial plan tax deductible.
Head of policy and government relations, Ben Marshan, said: “At the FPA we believe the inability to claim a tax deduction for the fees associated with an initial financial plan acts as a disincentive for people to take the first step towards organising their finances on a strategic basis”.
“This has widespread cost implications, both for the individuals and the community as a whole. Encouraging the use of professional financial planning services results in a more financial literate community and benefits society overall.”
Speaking to Money Management last year, Marshan likened the proposal to when consumers could claim any associated costs in doing tax returns with tax agents as a tax deduction, and said financial plans should enjoy similar benefits.
“We think that will make it easier for consumers to get advice, to receive advice, it will be easier for planners to provide advice to consumers,” Marshan said.
“When you’ve got consumers who in good faith have gone out there and paid for a financial plan and through no fault of their own because of the budget changes have to go away and pay for new advice again, we think it’s unfair that they can’t claim a tax deduction for having that plan reworked.”
A fee-for-service arrangement for the preparation of an initial financial plan is currently stated by the Australian Taxation Office to be not tax deductible under section 8-1 of the Income Tax Assessment Act 1997.
AUTHOR
Malavika Santhebennur
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
