Financial advisers have pleaded with the government to make financial advice tax deductible, saying it would open up advice to more Australians and ease strain on the social security system.
A recent ifa straw poll found that 95.8 per cent of respondents believe the government should introduce a tax rebate for financial advisers, with just 4.2 per cent of the 1202 survey participants opposing the measure.
Speaking to ifa, chief executive of the Institute of Public Accountants Andrew Conway said the issue of tax deductibility for financial advice is relevant now more than ever.
“The deductibility issue has become more relevant as advisers must now charge an upfront fee rather than receiving commissions directly from the product providers,” he said.
“As less than 20 per cent of the population use the services of a financial adviser, we believe that tax deductibility would encourage more people to use such services. In the long run if people better plan for their retirement, the government will be a beneficiary as there will be less reliance on people seeking age pension support, so the short-term cost can be outweighed over time.”
Lifetime Financial Group senior adviser Hugo Sampson told ifa the expectation that a layperson can fully understand all the options available to them for retiring, let alone formulate the optimum retirement plan, is ludicrous.
“Navigating this [retirement] minefield is hard enough and to let the layperson interpret the ever-changing legislative landscape is playing with fire,” Mr Sampson said.
“Providing tax deductions for costs relating to financial plans and associated implementation, not just ongoing advice fees, would see ordinary Australians incentivised to seek qualified financial assistance.
“This would make many more Australian’s less reliant on government assistance after their working life.”
Managing director and principal adviser at Meridian Wealth Management Paul Dunn told ifa, “Under the current legislation, if the advice is to establish a plan or the advice does not relate to assets that generate taxable income, then the advice fees are a capital expense and not tax deductible. If the expense is in relation to ongoing advice and management of an existing portfolio then the expenses are generally deductible.
“Superannuation rules are complex and planning for retirement requires the time and ongoing guidance of a professional adviser over the long-term. If the government are seriously concerned with the long-term financial stress on our social security system and the tax revenue that underpins it, then they need to take off the short-term blinkers and make financial advice fees 100 per cent deductible.”
VISIS Private Wealth partner Chris Smith said, “All financial advice relating to wealth management and creation should be tax deductible as the basis for the advice is the generation of income and gains to further develop an individual’s financial position.”
However, another adviser, speaking to ifa on condition of anonymity, described his peers supporting tax-deductibility as "rent-seekers".
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