In a pre-budget submission to Federal Government, the Financial Planning Association of
Australia (FPA) is recommending that the preparation of an initial financial plan, and ongoing
management fees or annual retainer fees, should be tax deductible.
Currently, a fee for service arrangement for the preparation of an initial financial plan is stated
by the Australian Taxation Office to be not tax deductible under section 8-1 of the Income Tax
Assessment Act 1997.
Commenting on the submission, Ben Marshan CFP®, Head of Policy and Government Relations
at the FPA, said, “At the FPA we believe that the inability to claim a tax deduction for the fees
associated with an initial financial plan acts as a disincentive for people to take the first step
towards organising their finances on a strategic basis.
“This has widespread cost implications, both for the individuals and the community as a whole.
Encouraging the use of professional financial planning services results in a more financially
literate community, and benefits society overall.”
According to the FPA, quality financial advice can:
• Reduce financial and social exclusion for consumers and help them navigate the
financial marketplace and learn how to better manage their finances providing them
with dignity and peace of mind throughout their life.
• Deliver significant consumer benefits including changes in savings behaviour, setting
proper budgets, following a plan for paying off debt, and organising finances and
building wealth.
• Change people’s behaviour and habits of managing their financial affairs by teaching
them sensible and simple practices that can be used in their everyday lives to prepare
for their future financial needs.
• Improve the financial capability of consumers, enabling them to make informed
judgments and effective decisions about the use and management of money throughout
their lives.
Research commissioned by the FPA has found that 30% of those who have not used financial
advice and do not intend to seek advice in future have stated that the high cost of advice is a
key reason for why they have not sought the advice.
“Public policy initiatives to improve access to affordable advice for all Australians, particularly
those most in need of assistance in managing their finances, will reduce the cost of advice for
consumers while maintaining consumer protections and advice quality.
“To support our proposal, the FPA recommends that the Government engage the Productivity
Commission to examine the short-term and long-term position of the Budget if the preparation of
an initial financial plan and ongoing fees were tax deductible. This report should be robust to a
variety of different solutions, such as means-tested or capped tax deductions,” said Mr Marshan.
Cut+PasteMarch 27, 201711.35am
