ATO revises advice fee tax deductible rules
The Australian Taxation Office (ATO) has confirmed financial advice fees for tax related guidance are deductible where the advice is provided by a Qualified Tax Relevant Provider (QTRP). The ATO released guidance stating, ‘fees for financial advice an individual incurs may be deductible under section 25-5 to the extent that the advice related to the managing their ‘tax affairs’.
- It added that, ‘it takes the view that tax (financial) advice is included within the meaning of 'tax affairs’.
- An individual must be able to identify the payment was for advice to assist them, in managing their tax affairs. For example, fees for advice in relation to salary sacrifice arrangements will be advise that assists an individual in managing their ‘tax affairs’.
Not all advice provided by a financial adviser will be considered to be tax (financial) advice.
Where an advisor merely provides factual information about a financial product that does not involve the application or interpretation of taxation laws to the clients personal circumstances, that advice will not be for managing the individuals tax affairs.
This new guidance does not change the ATO's current stance that other fees, being those related to initial advice, are capital in nature and cannot be deducted, and that ongoing advice fees are deductible.
TD 2024/7.
