The Financial Advice Association Australia (FAAA) has released its guide for financial advisers and accountants to explain how the professions can work together to claim a tax deduction for clients’ financial advice fees.
Developed in consultation with Chartered Accountants Australia and New Zealand (CA ANZ), CPA Australia, and the Institute of Public Accountants (IPA), the guidance aims to provide insight into how the ATO’s Tax Determination TD 2024/7, released in September 2024, can be practically implemented.
According to FAAA chief executive Sarah Abood, the guidance, which has been ratified by the accounting associations, can help advisers ensure they are complying with the latest determination.
“The implications of the updated ATO guidance are important for both financial advisers and accountants. We have worked together with the accounting associations so that the guidance is practical and consistent for both,” Abood said.
“The publication of this guide follows more than six years of advocacy from the FAAA to encourage the ATO to update its guidance. The ability for taxpayers to legitimately claim a portion of the initial advice fee for financial advice clients is new and is live now. The guide also provides clarity regarding the claiming of ongoing fees.
“Advisers can now support their clients to claim a legitimate tax deduction for financial advice fees with confidence.”
The guide includes the legislative background and definitions of tax (financial) advice and taxation law, while also outlining three potential methodologies for apportioning fees.
Additionally, it provides examples, statement of advice text and fee summary templates for active use.
Tony Negline, superannuation and financial services leader at CA ANZ, said: “We are proud to collaborate with the FAAA, CPA Australia and IPA on this combined industry guide to help both financial advisers and the accounting community to understand the practical implications of the tax deductibility of financial advice fees, which will ultimately benefit our clients.”
CPA Australia superannuation lead, Richard Webb, added that the association is looking forward to “further explaining the changes and working with our members and the financial advice community to collaborate and embed the use of this guide”.
Tony Greco, senior tax adviser at IPA, said: “We hope the guide is helpful for the financial services community, in conjunction with our members acting as the client’s tax adviser, to have real clarity of the approach to apportionment and deductibility more generally.”
