The Financial Planning Association (FPA) will put pressure on the Rudd Government to make fee-based financial advice tax deductible, after years of failing to sway the Coalition.
In a pre-budget submission to the newly-formed Federal Treasury, the FPA argued for competitive neutrality in the provision of advice on the grounds that the current situation is “confused”.
Consumers can claim a tax deduction when they pay a commission for receiving advice but not when they use the growing number of planners that charge a fee for their service.
The FPA called for Labor to make initial fees tax deductible and said the Australian Taxation Office (ATO) is treating taxpayers inconsistently.
“Consumers are therefore paying for personal financial advice in varying ways that result in different taxation treatments for no apparent public benefit,” the FPA said.
Under the Income Tax Assessment Act, a fee-for-service arrangement for preparing a financial plan is not tax deductible because it is treated as an expense associated with putting an income earning investment in place.
But the FPA is arguing that many Australians who are not well off cannot afford to get advice because it is not tax effective.
It has mounted a case to bring the tax structure for planners in line with that of accountants, whose fees and charges are tax deductible.
In November, FPA chief executive Jo-Anne Bloch said many people were also put off from seeking a planner because of negative perceptions surrounding commissions.
