It’s far too early to celebrate but the tax office is finally launching a consultation process to consider the tax deductibility of advice fees. The process won’t be finished until mid 2023 but there is cause for hope that reasonableness might prevail this time as there is a strong case for the tax deductibility of advice fees.

The FPA’s Sarah Abood stated that “One of the quickest and easiest ways to make quality financial advice more affordable for consumers, would be to make it tax-deductible in full.”

For advice to be deductible it must contain a tax component. Currently, the ATO’s view is that such advice occurs too early in the advice process for that to be satisfied. The FPA’s view is that “it’s the character of advice that should determine its tax treatment, rather than purely the timing of the fee paid,” Sarah Abood added, “there is currently no ATO view on the tax treatment of tax (financial) advice – which in our view should be fully deductible as a cost of managing tax affairs.”

Contribute to the review if you wish – and keep your fingers crossed.