An adviser-led petition to reinstate the previous Australian Taxation Office interpretation of Reduced Input Tax Credits on advice fees has received backing from the Coalition ahead of an impending federal election.
The RITC allowed funds or platforms to claim a rebate from the GST applied to financial advice fees from 2.5 per cent to 10 per cent. This meant that when a $1000 advice fee resulted in $100 of GST, the RITC would return $75 therefore resulting in a net payment of $1025 instead of $1100.
Bull Financial Group financial adviser Leanne Bull is leading the petition and a press release from Shadow Minister for Financial Services Luke Howarth’s office said he, along with fellow Coalition MPs Bert Van Manen and Keith Pitt, have met with her on the issue.
Pitt agreed to table the petition in the House of Representatives to ask the government to amend the law to reinstate the rebate of GST on certain fees charged through financial advice platforms.
Bull tells Professional Planner she’s “putting up a fight” over the changes.
“I’ve just had my first fourth generation client and I could have another half dozen if not more,” she says, referring to details from a profile from this publication earlier this year.
“It’s so hard because at the end of the day I don’t want to take money off anybody that I’m not going to help make money. My reputation is more important than anything, but it’s getting hard to justify helping people start.”
Bull hasn’t had the chance to speak to Jones but would like him to take an interest in the matter as well.
“It’s just not in line with the whole focus of the last couple of reducing costs and making advice more affordable so that financial planners can help more people,” Bull says.
“The need [for more financial advice] is definitely there and it’s just not in the spirit of that and it’s very disappointing to be adding an additional layer of expensive costs.”
The Financial Advice Association had already kicked off advocacy in bringing back the tax credits, noting this along with the CSLR levy, an increased ASIC levy and a slow advice reform process has only contributed to the cost of advice.
FAAA general manager for policy Phil Anderson said at a media briefing earlier this year the change could cost clients a collective $250 million.
Bull started working on a FAAA sub-committee established to explore the full extent of government costs on financial advisers.
The sub-committee claims the average cost passed on to clients – for government levies and regulatory compliance – is $870 to $995 per year (assuming an average of 150 clients per adviser).
GST added another $150, on average, but the change of the ATO’s interpretation means it will increase fourfold to $600.
However, advocacy from industry bodies meant the ATO changes had been delayed three months.
The petition is available on the e-petitions page on the Parliament of Australia website and closes on 4 December.
With a federal election due next year, the Coalition has ramped up its attacks on the government for its slow progress of advice reform, which Minister for Financial Services Stephen Jones identified as a “hot mess” before the 2022 election.
But after winning the election, the Labor government had instead waited for the conclusion of the Quality of Advice Review before progressing with any changes, other than the experience pathway which was outside of the remit of the review.
The government has passed one tranche of QAR-related legislation and said it intends to deliver the rest of the draft law by the end of the year.
Last week, the opposition had tabled in Parliament its own Quality of Advice Review legislation to parliament that specifically focused on removing Statements of Advice and replacing it with Letters of Engagement and Records of Advice.
