ATO session on tax deductibility of monetary recommendation charges welcome: FPA


The Monetary Planning Affiliation of Australia (FPA) says yesterday’s choice by the Australian Taxation Workplace (ATO) to replace its steering on the tax deductibility of monetary recommendation charges may be very welcome.

The ATO’s transfer comes after two years of advocacy and engagement by the FPA, at the side of Tangelo Recommendation Consulting.

FPA CEO, Sarah Abood, says the ATO’s session course of could possibly be a gamechanger.

“The FPA has lengthy been advocating for broad tax deductibility of each preliminary and ongoing monetary recommendation charges. One of many quickest and best methods to make high quality monetary recommendation extra inexpensive for customers, can be to make it tax-deductible in full.

“Whereas we proceed to advocate strongly for this consequence with authorities, we’ve additionally been calling out considerations with the ATO’s present steering on deductibility of recommendation. Tax Willpower 95/60 considers an upfront payment paid for an funding plan in 1995. IT39 displays an ongoing payment paid on an funding portfolio in 1980. A lot has modified in our career since then, and we consider it’s essential that the steering be up to date to think about the non-public recommendation, topic to the very best curiosity responsibility, that’s delivered by skilled monetary planners at this time.

“The ATO’s dedication to concern a brand new Tax Willpower – indicating its willingness to modernise its long-standing view on this necessary concern – will present extra certainty to our members and the broader group of Australians who profit from complete monetary recommendation.

“There are two essential areas of the present Tax Willpower we’re eager to see reviewed. The primary pertains to the timing of recommendation. The present view is that monetary planning recommendation occurs ‘too early in time’ to be thought-about a part of the income-producing course of. Nonetheless in our view, it’s the character of recommendation that ought to decide its tax remedy, quite than purely the timing of the payment paid.

“Secondly, there’s at the moment no ATO view on the tax remedy of tax (monetary) recommendation – which in our view must be absolutely deductible as a price of managing tax affairs.

“The FPA will proceed to work carefully with the ATO, and wider career, to assist make sure that tax deductibility of monetary recommendation charges change into a actuality in all levels of the monetary recommendation course of,” Ms Abood says.

Extra data concerning the ATO’s session will be discovered here on the ATO’s Recommendation underneath growth web site.