ATO session on tax deductibility of economic 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 economic recommendation charges could 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 might 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 price paid for an funding plan in 1995. IT39 displays an ongoing price paid on an funding portfolio in 1980. A lot has modified in our career since then, and we imagine it’s important that the steering be up to date to think about the non-public recommendation, topic to one of the best curiosity responsibility, that’s delivered by skilled monetary planners in the present day.
“The ATO’s dedication to problem a brand new Tax Willpower – indicating its willingness to modernise its long-standing view on this essential problem – will present extra certainty to our members and the broader neighborhood of Australians who profit from complete monetary recommendation.
“There are two important 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 of a part of the income-producing course of. Nonetheless in our view, it’s the character of recommendation that ought to decide its tax therapy, relatively than purely the timing of the price paid.
“Secondly, there’s at present no ATO view on the tax therapy of tax (monetary) recommendation – which in our view must be totally deductible as a value of managing tax affairs.
“The FPA will proceed to work intently with the ATO, and wider career, to assist be certain that tax deductibility of economic recommendation charges change into a actuality in all phases of the monetary recommendation course of,” Ms Abood says.
Extra info relating to the ATO’s session could be discovered here on the ATO’s Recommendation underneath improvement web site.