The Financial Planning Association (FPA) has urged the Government to allow alternative methods of paying for advice in order to increase public access to financial planning services.
In this year’s pre-Budget submission, the FPA called for all advice fees to become tax deductible and recommended allowing consumers to use their superannuation balance to pay for financial planning services.
This would include extending the sole purpose test in the Superannuation Industry (Supervision) Act or the inclusion of a specific trustee authority to enable consumers to pay their adviser; using salary sacrifice arrangements; or using a small portion of the Government’s co-contribution to pay for advice.
“A consumer should be allowed to use their superannuation account balance to pay for advice from any qualified financial planner, as long as the advice supports building of retirement savings,” the FPA said in its submission.
“Advice fees should be transparently disclosed and clearly separated from fund management fees.”
The FPA also noted that, with the banning of conflicted remuneration, there was an opportunity to amend what it called an “anomaly” with respect to the tax deductability of financial planning fees.
The submission stressed the precedent for tax deductability was already set and allowed consumers to deduct fees paid to registered tax agents, BAS agents and lawyers.
The industry body recommended the preparation of an initial financial plan, and ongoing management fees or annual retainer fees, be expressly stated to be tax deductible.
“Commencing July 2014, financial planners will be required to register with the Tax Practitioners Board as tax (financial) advisers, and adhere to the requirements of the Tax Agent Services Act, along with their tax agent peers,” the submission read.
“The amendment to the Tax Agent Services Act in 2013 defines a tax (financial) advice service as a type of tax agent service,” it added.
“Including financial planners in the Tax Agent Services regime, and the banning of commissions on financial advice, set the right environment for the introduction of tax deductibility of financial advice fees.”
