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Under the ATO’s latest determination, fees incurred for tax-related financial advice services, when provided by a qualified tax professional, will be deductible under section 25-5 of the Income Tax Assessment Act 1997. This offers a clearer understanding of who qualifies as a provider and what type of advice is deemed deductible.
One interesting case cited involves fees for advice on income protection insurance provided by a tax adviser. According to the ATO, such fees may qualify for tax deductibility. This represents a substantial win for advisers and their clients seeking clarity in uncertain tax regulatory environments.
It is important to note, however, that the ATO has maintained its stance against the deductibility of financial advice fees for life insurance. This distinction highlights the nuanced understanding required in interpreting and applying tax laws to financial advice services.
The Financial Advice Association Australia (FAAA) has responded positively to the determination. CEO Sarah Abood expressed gratitude towards the ATO, stating, "We appreciate the clarity provided by the ATO on this matter. With the confirmed deductibility of a significant portion of advice fees, we anticipate that financial advice will become more accessible to a broader population."
Abood further mentioned that the FAAA aims to release comprehensive guidance on this subject by early next year, helping advisors navigate and comply with the new regulations. She added, "We are committed to supporting our members in understanding the ATO’s views and advising their clients more effectively."
By shedding more light on the specifics of what constitutes deductible advice fees, the ATO has potentially made financial advice services both more transparent and affordable. This shift holds the promise of wider financial inclusivity as more Australians could seek affordable advice for their financial health.
For those interested in a deeper dive into the ATO’s determination, a detailed document can be accessed directly from the ATO’s resources on their official website.
Sources confirm the new guidelines to have been shaped through considerable consultations aiming to demystify aspects of tax deductibility impacting financial advice services. As with any regulatory clarification, it reshapes the landscape for both service providers and their clientele — underscoring the ongoing evolution of financial advisory and compliance needs in Australia.
Published:Thursday, 3rd Oct 2024
Source: Paige Estritori
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