FPA welcomes ATO financial advice guidance

The Financial Planning Association of Australia (FPA) has welcomed guidance from the Australian Taxation Office (ATO) on the tax deductability of financial advice fees.

The FPA had previously advocated for tax deductability as it believed it was “one of the quickest and easiest” ways to make financial advice more affordable.

There were two critical areas which it would like to see reviewed, one about timing as the current view on timing was that financial planning advice happened ‘too early in time’ to be considered part of the income-producing process.

However, the FPA felt the character of advice should determine its tax treatment rather than the timing.

The second related to tax treatment of tax (financial) advice which the FPA felt should be fully deductible as a cost of managing tax affairs.

FPA chief executive, Sarah Abood, said: “The ATO’s commitment to issue a new Tax Determination – indicating its willingness to modernise its long-standing view on this important issue – will provide more certainty to our members and the broader community of Australians who benefit from comprehensive financial advice. color:#222222">

“While we continue to advocate strongly for this outcome with government, we’ve also been calling out concerns with the ATO’s current guidance on deductibility of advice.

“Tax Determination 95/60 considers an upfront fee paid for an investment plan in 1995. IT39 reflects an ongoing fee paid on an investment portfolio in 1980. Much has changed in our profession since then, and we believe it’s critical that the guidance be updated to consider the personal advice, subject to the best interest duty, that’s delivered by professional financial planners today.”