Make financial advice tax deductible, FPA says

In a statement yesterday, the FPA said it wrote in its pre-budget submission to Treasury that a fee-for-service arrangement for the preparation of an initial financial plan is currently not tax deductible.

“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,” said Ben Marshan, FPA head of policy and government relations.

“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.”

FPA added that research shows high cost is one reason many people don’t seek 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,” Mr Marshan said.

“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.”