The Financial Advice Association of Australia (FAAA) has released practical guidance on the tax deductibility of financial advice fees.
Developed in collaboration with Chartered Accountants Australia and New Zealand (CA ANZ), CPA Australia, and the Institute of Public Accountants (IPA), the comprehensive guide intends at providing advice into how the ATO’s Tax Determination TD 2024/7, released in September 2024, can be practically implemented.
FAAA CEO Sarah Abood expressed satisfaction with the joint effort, stating, “The implications of the updated ATO guidance are important for both financial advisers and accountants. We have worked together with the accounting associations so that the guidance is practical and consistent for both.”
The guide is the result of more than six years of advocacy by the FAAA, encouraging the ATO to revise its guidance. It introduces the possibility for taxpayers to claim a portion of the initial advice fee and provides clear instructions on the claiming of ongoing fees.
“Advisers can now support their clients to claim a legitimate tax deduction for financial advice fees with confidence,” Abood added.
The document details the legislative context, defines tax (financial) advice and taxation law, and proposes three methodologies for fee apportionment. It also includes practical tools such as, Statement of Advice text, and fee summary templates for immediate application.
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By GlobalDataCA ANZ’s Superannuation and Financial Services Leader Tony Negline highlighted the collaborative nature of the guide, saying, “We are proud to collaborate with the FAAA, CPA Australia, and IPA on this combined industry guide to help both financial advisers and the accounting community to understand the practical implications of the tax deductibility of financial advice fees, which will ultimately benefit our clients.”
Echoing the sentiment, CPA Australia’s superannuation lead Richard Webb looked forward to “further explaining the changes and working with our members and the financial advice community to collaborate and embed the use of this guide.”
