The Institute of Public Accountants (IPA) has renewed its call for financial advice to be made tax deductible, arguing the cost to the Government will not be significant as planning costs were previously fully deductible as commissions when paid to a financial planner.
IPA chief executive, Andrew Conway has pointed to the Intergenerational report and the need for Australians to be competently advised as they head towards a longer working life.
“Competent and affordable financial advice will be an essential ingredient in paving the way to sustainable retirement incomes and to help alleviate over-reliance on government funded pensions,” he said.
“The IPA believes there is a strong case to support the tax deductibility of all of the costs of financial planning advice,” Conway said. “Currently, a fee for service arrangement for the preparation of an initial financial plan is not tax deductible as it is not considered to be an expense incurred in producing assessable income.”
“Changes to conflicted remuneration arrangements and the introduction of the best interests duty for the financial advice sector as part of the Future of Financial Advice reforms strengthen the case for the provision of deductible financial advice,” he said. “The cost to Government will not be significant as these costs were previously fully deductible as commissions when paid to the financial planner.”
“The costs of a capped tax deductibility limit for financial planning advice will be significantly outweighed by the longer term benefits of assistance provided to tax payers as they plan for independent retirement,” Conway said.
