Make financial advice deductible in May Budget, say accountants
The Federal Government should address an ongoing anomaly by using its May Budget to legislate for the deductibility of financial advice, according to the Institute of Chartered Accountants in Australia (ICAA).
In a submission filed with the Treasury this week, the ICAA has pointed out that one of the primary objectives of the Future of Financial Advice (FOFA) changes has been to expand the availability of low-cost, simple financial advice, and making the cost of advice deductible was consistent with this outcome.
"The institute believes the Government should consider changes to the existing rules that limit the availability of tax deductions and the obtaining of financial advice by taxpayers," it said.
"Clearly, allowing taxpayers to claim deductions for financial advice would play a role in helping boost the accessibility and affordability of financial advice in Australia."
The ICAA submission referred to the Australian Taxation Office (ATO) determination dealing with the deductibility of investment advice which stipules that fees charged for drawing up an investment plan are not deductible, because they constitute expenditure of a capital nature incurred while putting the income earning investments in place.
It noted that ongoing management fees or retainers were generally deductible, because they are expenses incurred in the management of income-producing investments.
"We believe it is an anomaly that the ongoing management of superannuation, for example, is not tax deductible (as superannuation is not income-producing), but where the financial advice on superannuation is related to taxation, this advice is tax deductible."
The submission said the Institute believed changes should be considered to the income tax law to allow deductibility for fees relating to the development of a financial plan and that, in conjunction with this, consideration should be given to widening the scope of deductions available for the management of income-producing investments as well as specific non-income-producing investments such as superannuation.
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