FAAA aligns with accounting groups on advice deductibility

Having lobbied for more than a decade to achieve the outcome, the Financial Advice Association of Australia (FAAA) has aligned with the major accounting groups around the tax deductibility of financial advice fees.

The FAAA announced that, in consultation with Chartered Accountants ANZ, CPA Australia and the institute of Public Accountants (IPA) it has backed a joint released guide for financial planners and accountants about claiming a tax deduction for financial advice fees.

The jointly released guide reflects a combined approach to last September’s determination from the Australian Taxation Office (ATO) Tax Determination TD 2024/7.

FAAA chief executive, Sarah Abood stressed the importance of the practical guide having been “ratified” by the accounting associations.

“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,” she said.

“The publication of this guide follows more than six years of advocacy from the FAAA to encourage the ATO to update its guidance. The ability for taxpayers to legitimately claim a portion of the initial advice fee for financial advice clients is new and is live now.  The guide also provides clarity regarding the claiming of ongoing fees.

“Advisers can now support their clients to claim a legitimate tax deduction for financial advice fees with confidence.”

According to the FAAA, the guide includes the legislative background and definitions of tax (financial) advice and taxation law. It outlines three potential methodologies for apportioning fees and provides examples, Statement of Advice text and fee summary templates, for active use.

The major accounting groups each issued statements backing the value of the combined industry guide.

The jointly-developed guide represents a further indication of the FAAA’s recent work with the major accounting bodies, including their response to the pay day superannuation draft legislation and the additional relief around Reportable Situations.