Should product advice negate tax deductibility?

Most financial advisers believe financial advice should be tax deductible for clients, but a significant cohort believe it should not be tax deductible for advice around product sales.

A survey conducted by Money Management has revealed that while virtually 100 per cent of advisers support the Government moving to make advice tax-deductible, there is disagreement around whether that deductibility should be applied to all advice.

In fact, the survey revealed most support for highly specific advice around transition to retirement (TTR) and superannuation, with significantly less support for where life/risk sales are concerned.

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The survey has been undertaken at the same time as the Financial Planning Association (FPA) has pressed the Government to make advice tax deductible around advice helping people decide whether or not to opt in to insurance inside superannuation.

What the Money Management research has revealed is that while 70 per cent of respondents supported tax deductibility for “holistic” advice they became somewhat more selective when they were asked to specify what sorts of advice should qualify.

Where life/risk advice was concerned, only 56 per cent of respondents believed it should be tax deductible, while nearly 44 per cent believed it should not.

This compared to the 75 per cent who supported superannuation advice being tax deductible and the 69 per cent of transition to retirement advice.

 




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If complex advice is provided by an Authorised Representative in regard to personal or business related risk insurance strategy and the advice is not acted on , then the cost of the advice provided and received should be tax deductible.
If the risk insurance product is implemented, the premium cost of the Life, TPD and Trauma Insurance components should be tax deductible without claim proceeds being assessable if outside the superannuation space.
Income Protection Insurance premiums being mostly deductible but assessable at claim time as replacement of income is acceptable.
The objective surely should be to make personal risk insurance advice and product more affordable to the consumer to attempt to encourage a greater take up of both advice and risk insurance product through qualified advisers.
The tax deductibility of risk advice and product should only be available if the individual receives the advice via a documented and personal advice process and through an Authorised Representative.It should not be tax deductible if the product is purchased online, directly or without documented and personal advice provided.

are product MER's tax deductible? I can't see why they are not, fees paid for the production of taxable income, and yet I'm not sure all accountants pick it up or if there is a ruling?

MER/ICRs are usually deducted before the return is declared to the investor. This reduces the amount of taxable income to the investor, so you don't claim them again in any way.

Since most returns are provided after fees I would think that it would all work out the same in the long run.

Bozo, re; MER's, the fact you're asking this helps me understand why education standard need to rise.

very helpful max, thanks, you must feel good about knowing everything.

although I don't agree with the tone of max's email. your post is actually concerning because we need to know this stuff back to front including being able quote sections of both tax acts better than anybody else.

if we do not know this basic information we will never be able to defeat the accountants. you should think about studying 2 hours per day working on your craft, and completing at least 100 hours of CPD per annum. I do close to 300 including post grad study and CPD combined. Try and read about 500 pages per day. It takes time but you can build up to it over time.

A good course is the master of taxation at Sydney university. it's only $4,300 per subject, 8 x subjects in total and you can complete it part time over 4 years.

Otherwise, we will never defeat the Accountants if we don't even know the difference between assessable income and taxable income.

good luck,

friendly FP

thanks, good advice. My question was actually fishing in a way, to see if any accountants did claim them as deductions, I know some have asked me the question about them.

Of course it was?!

the requirement to become a registered tax agent is a diploma and 12 months experience.

the ATO came out recently (i can't find the article or the link, and frankly don't have the time to substantiate everything I say, although I should) stating 85% of returns lodged by registered tax agents are incorrectly lodged.

Need I say more.

I bid you good day. I have to get back to do more CPD and reading. suggest you do the same. let's get in two hours today.

Best,

friendly FP

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