Tax complexity driving advice
The complexity of the Australian tax system is one of the key drivers for Australians to seek professional financial advice, according to the Financial Planning Association (FPA).
The FPA has used its submission to the Tax White Paper discussion process to renew its arguments around the tax deductibility of financial advice, stating that "the complexity of tax laws and tax administration in Australia makes it difficult for everyday Australians to plan for the future without the assistance of a financial planner".
"… As a result, the complexity of the tax system makes it more difficult for Australians to plan for their future without professional financial advice," it said.
"In 2014, 16.9 per cent of Australian adults are financially excluded to the extent that they only own one basic banking product."
The FPA submission said that over 80 per cent of Australians do not seek financial advice, and that its research indicated that two million Australians hade an unmet financial advice need.
"Thirty per cent of those do not intend to seek financial advice in future cite the cost as a key reason," it said. "As a result of the costs involved in addressing tax complexity, the complexity of the tax system itself promotes financial exclusion."
"It is not in the interests of a fair, egalitarian, and meritocratic society that Australians experience inequality of opportunity as a result of complexity in the tax system. We recommend that the Tax White Paper considers several policy options to alleviate the impact of system complexity on the ability of Australians to plan for their future."
Among the policy options canvassed by the FPA were the tax deductibility and the possible introduction of a voucher/rebate system for advice, entailing a direct subsidy or rebate for seeking professional financial advice.
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